Do I pay VAT on Gold and Silver Bullion?
Navigating the UK’s Gold and Silver Tax Landscape
Gold and silver have long been prized for their stability and value. In the UK, these precious metals can be a wise investment, but it’s important to understand the tax implications before you dive in. This blog post will guide you through the two main taxes you might encounter: Capital Gains Tax (CGT) and Value Added Tax (VAT).
Capital Gains Tax (CGT)
CGT applies to the profit you make when you sell an asset, including gold and silver. Here’s a breakdown of how it works:
- UK Legal Tender Coins:Â Good news! Gold and silver coins minted by the Royal Mint and considered legal tender in the UK are exempt from CGT. This includes popular choices like Britannia coins and Sovereigns. You can enjoy unlimited tax-free profits on these coins.(https://www.bullionbypost.co.uk/capital-gains-tax-free-gold-coins/)
- Other Gold and Silver: For non-UK legal tender coins and gold bars, CGT may apply to the profit you make on the sale. The tax rate depends on your income tax bracket, with a range of 10% to 28%. You also have an annual CGT-free allowance (currently £12,300 for the 2023/24 tax year) that applies before any CGT is due. (https://www.royalmint.com/invest/discover/invest-in-gold/all-that-investors-need-to-know-about-gold-and-tax/)
Value Added Tax (VAT)
VAT is a tax added to the price of goods and services. Here’s what you need to know for gold and silver:
- Investment-Grade Gold:Â Fortunately, investment-grade gold, including bars and coins meeting specific purity standards, is exempt from VAT. This makes it an attractive option for VAT-registered businesses and individuals. (https://www.royalmint.com/invest/discover/invest-in-gold/value-added-tax-on-investments/)
- Silver:Â Unlike gold, silver is generally subject to VAT at the standard rate of 20%. However, there may be exceptions for certain types of silver, so it’s always best to check with the seller for clarification.
Official Resources:
- HMRC (UK’s tax authority):Â https://www.gov.uk/government/organisations/hm-revenue-customs
- The Royal Mint:Â https://www.royalmint.com/
Remember: This blog is for informational purposes only and should not be considered tax advice. For specific tax guidance, consult with a qualified accountant or tax advisor.
By understanding CGT and VAT, you can make informed decisions about investing in gold and silver in the UK. With careful planning, you can maximize your returns and navigate the tax landscape effectively.