VAT – All you need to know

VAT

What is VAT?

Value Added Tax (VAT) is added onto most consumer goods and services in the UK. The current general rate of VAT is 20% with some items being at a reduced or zero rate. This is added at the point of sale and the consumer will bear the charge.

Exemptions to VAT

Many food and drinks are zero-rated except alcohol, confectionary and hot food. Most cultural and leisure activities are exempt as are some health, education and charity goods and services.

VAT on gold

This depends on what type of gold you buy. Since the 1st January 2000, the VAT Act 1994 exempts Investment Grade Gold from Value Added Tax. So as long as your purchased gold qualifies as Investment Grade, then no VAT will be charged.

There are a few requirements for gold to qualify for exemption:

Firstly, it has to be in the form of a coin or a bar. For this reason, VAT is still added to gold jewellery. 7 Crucial Considerations before you buy gold or silver MPUYou should also avoid gold dust, gold ore and gold watches if you want to be tax efficient.

If you opt for a gold bar, the purity needs to be at least 995 thousandths. The good news is that a majority of gold bars on the market exceed this, at 999 thousandths gold, with the rest generally meeting the minimum requirement.

For gold coins, the purity target is lowered to 900 thousandths, meaning that any coin of 22 carats or higher will qualify. There are a few extra guidelines for coins – they must be minted after 1800, have been legal tender in its country of origin and not usually sell at more than 180% of the market value of its gold content. Essentially these additional rules exclude very old, obscure numismatic coins.

If all this sounds complicated, don’t worry. We only sell gold coins and bars that meet these requirements and qualify as Investment Grade, so you’ll never pay Value Added Tax when buying through Physical Gold.

VAT on silver (exclusively Tax Free at Physical Gold)

If you buy any form of silver in the UK, your purchase is subject to 20% VAT, regardless of purity and whether it’s a coin or bar. Despite this cost, physical silver investment in the UK has continued to grow in popularity, as analysts believe the silver price is severely undervalued.

But as tax efficient investment specialists, we couldn’t accept being down 20% due to tax before you’ve even started. So, we have exclusively developed two innovative solutions for the purchase of silver bars and coins in the UK without incurring VAT – meaning you get to keep more of your profits.

Our silver bars are stored, on your behalf, in the Channel Islands. Keeping them offshore means your purchase is exempt from VAT as they fall outside of UK tax. With large bars available, you’re able to obtain tighter margins on your silver, while still being tax efficient

Daniel Fisher

Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.

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