However, perhaps now more than ever, buyers need to act cautiously and “research” before making an investment. In this article, we investigate four UK taxes: the capital gains tax (CGT), value added tax (VAT), inheritance tax and income tax, in relation to purchases of physical forms of gold and silver. A number of gold coins are exempt from the CGT. The coins that are exempt are many of the coins produced by the Royal Mint, since they are considered legal tender in British currency.
Since all gold coins made in the United Kingdom are produced by the Royal Mint (non-legal tender coins are called “round”), this means that almost all British gold coins are CGT free. You only pay taxes when you sell your gold for cash, not when you buy more gold with that money. Under a gold options contract, you have an agreement with the option to buy or sell gold if it reaches a certain price on a predetermined date. In other words, gold coins are taxed based on their total value, rather than just weighing the amount of gold they are made of.
That said, gold prices can be very volatile, meaning that gold isn't a totally (or even primarily) safe investment. If you buy gold under the Special Accounting Regime for Gold, you must account for VAT on the value of the gold delivery made by the seller. If you buy manufactured products that contain gold and are offered for sale as such and you pay more VAT to your supplier, you may be asked to demonstrate that your purchase did not comply with the provisions of the Special Accounting Regime for Gold. Fortunately, throughout the European Union there is an initiative to exempt from VAT all gold products that are considered “investment” gold or “ingots”.
The Special Accounting Regime for Gold covers deliveries of gold between taxable persons, as described in paragraph 11.2.If you sell investment gold for which you have collected VAT (for example, because you have chosen to pay taxes), you must comply with all the normal billing requirements for taxable transactions in the VAT Guide (VAT Notice 700) and the requirements of the Special Accounting Scheme for Gold (see paragraph 11), Whether you buy your gold coins in person or online, you don't want to spend money on counterfeits or on Gold is less pure than they would have you believe. This includes coins and ingots weighing 1 kilogram or 1000 troy ounces respectively, along with any gold or silver item containing more than 50% pure gold or silver. This type of gold can be purchased safely without the involvement of VAT and, in fact, saves 20% when buying this form of gold. This notice explains how you should treat supplies and imports of gold and investment gold for VAT purposes.