Information on VAT and Capital Gains Tax Exemption for UK Residents
Capital gains tax is the profit or “gain” that you make when you sell something that you have previously owned. This can include valuable commodities like gold, silver, property and even inherited items. You can earn capital gains on any asset that you have in your possession that values at least £6,000. Like all income, capital gains are also taxed.
There is, however, a tax-free allowance that can help reduce your total tax bill. While it is true that most bullion owners don’t have to pay this tax because the value of their investment falls under the tax-free limit, it is beneficial to know your obligations as an investor.
Contrary to popular belief, an investor is liable to pay the capital gains tax if the total value of the profit earned from their sales is more than £12,000. It should be noted that this, in fact, is not the total value of the sale but only the profit. Because of this clause, most of the investors that own or buy/sell bullion are exempt from paying the tax. The tax-free limit, however, is reviewed every year and might vary depending on the market value of gold and silver.
If you do not want to pay taxes on precious metals investments, there are specific investment coins that you should consider. These include all types of currency that are legal in Great Britain, including gold Britannia coins, silver Britannia coins and gold Sovereigns. Investors can invest in these commodities limitlessly and there are no taxes to be paid no matter how much profit you earn. Investments of all sizes and values are completely tax-free on all gold and silver British issued coins.
If you would like to invest in gold and silver bullion and you want to be exempt from paying taxes, there are some smarter approaches you can take. Many investors own bullion in smaller units, such as 1 ounce or fractional ounce coins. This way, they may sell it in smaller amounts over the course of a few financial years. This spreads the value of the profit over different years, and allows investors to remain under the tax-free limit of the same year. It is very important to note, however, that the value of gold and silver is constantly changing.
UK residents wishing to avoid taxes altogether should invest in gold Sovereigns and Britannia coins. This is simply the easiest way to avoid taxation on profits - simply invest in a commodity that isn't taxed.