VAT on Silver Bullion
Why do I pay VAT on silver but not on gold and when are my gold and silver bullion and coins subject to Capital Gains Tax?
Why do I pay Value Added Tax (VAT) on silver bullion?
Almost everything we buy in the UK is subject to VAT and there usually has to be a good reason for the Government not to add VAT to a product. Silver is no different. And gold used to be too, until very recently.
So why is no VAT charged on gold anymore?
Before 1 January 2000 gold sales in the UK were subject to VAT. This changed because of the disparity between rules in the European Union. For example, some countries in the EU didn’t charge VAT on gold at all or charged it at a very low rate. This meant that the UK was at a disadvantage compared with other EU member states. The introduction of the exemption meant that for VAT purposes, gold would be treated the same as other investments, such as stocks and shares.
Which Royal Mint Bullion products are free from VAT?
All gold bullion and gold coins sold by The Royal Mint are free from VAT, including:
- Royal Mint Refinery Gold Bars
- Gold Britannia coins
- The Sovereign
- Gold Lunar Coins
- Gold Queen’s Beasts Coins
- Signature Gold
It is important to remember, the above products are free from VAT on the original purchase only. Storage and management fees are still liable for VAT. The international ranges of gold bullion coins which are sold by The Royal Mint including The Krugerrand and Maple are also VAT free. Silver coins, regardless of the country of issue, are subject to VAT at the current rate of 20%.
Which Royal Mint Bullion products are free from Capital Gains Tax (CGT)?
All UK legal tender is free from CGT. Including:
- The Sovereign
- Gold and silver Britannia coins
- Gold and Silver Queen’s Beasts Coins
- Gold and silver Lunar Bullion coins
What’s the difference between VAT and CGT?
VAT is the tax you pay on something you buy, which usually adds 20% to the price. But there is also a 5% VAT rate and a 0% rate.
CGT is the tax you pay on the profit you’ve made on an item when it’s sold. For example, if you bought a coin for £250 and sold it for £700, the CGT would be on the £450 you made from the sale. But you don’t have to pay CGT if all your gains in a year are under your tax-free allowance.
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