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With the UK rate of Value Added Tax (VAT) increased today to 20%, most purchases will instantly become more expensive. In the investment world, the level of VAT charged on an asset can seriously affect returns. For example, the full VAT level applies to the purchase of silver coins and bars meaning the metal has to rise by 20% in value before you make any money (not to mention the huge bid/offer spreads of up to 50% which apply to silver).
However investment gold is still the only precious metal with an official HMRC VAT exemption. The term ‘investment grade’ gold means gold of at least 22 carats in purity in the form of a bar or coin. As long as you stick to these parameters, you’ll pay no VAT whatsoever. Here at Physical Gold Ltd we ONLY deal in investment-grade gold as we always focus on getting our customers the best returns possible. Steer clear of gold nuggets and gold dust as both of these fall outside the HMRC guidelines.
Generally all the main 1oz bullion coins, Sovereign coins and assayed gold bars will be of investment grade.
The current VAT exemption could be lifted at any time but once you’ve bought the gold tax cannot be applied in a backdated nature.
So while everyone worries how the VAT hike will make life that bit tougher, why not capitalise on the exemption for gold and spread some of your risks. And don’t forget if you buy UK coins such as Britannias or Sovereigns, they are Capital Gains Tax-free too, so you’ll pay no tax when you buy them and no tax on any profits you make!
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.