Contents
- Do you pay inheritance tax on gold?
- Are gold bullion and coins exempt from capital gains tax in the UK?
- Capital Gains Tax on Gold Bullion
- Capital Gains Tax on Gold Coins
- What is Inheritance Tax UK?
- What assets are Exempt From Inheritance Tax in the UK?
- What is an estate, and what is included in it?
- How is Gold & Inheritance Tax affected?
- What is an ‘Inheritance tax gift’ allowance?
- Are UK Gold Sovereigns and Britannias exempt from tax?
Is Gold Exempt From Inheritance Tax UK
Buying and selling gold has never been easier, with Bullionjoy making it possible for investors and collectors to buy gold and silver bullion online. However, the question arises, what about when it comes to inheritance? Is gold exempt from inheritance tax UK?
This article is about the many tax regulations you must be aware of before buying bullion, mainly if your investment will result in inheritance for one or more beneficiaries.
Do you pay inheritance tax on gold? The answer to this question may surprise you ‘no’. While not all gold is entirely exempt from inheritance tax, there are some significant advantages if your goal is to pass wealth in the form of coins minted by The Royal Mint. They will be both Capital Gains and value-added tax-free!
Are gold bullion and coins exempt from capital gains tax in the UK?
We break down two main questions which we get asked regularly; are gold bullion and coins exempt from CGT in the UK, and if they are, what is the process for reporting any gains made to HMRC?
Capital Gains Tax on Gold Bullion
The first item of legislation to consider is the Capital Gains Tax (often referred to as CGT). ‘Capital gains’ are the profit generated by selling an asset for a higher price than its purchase price. For example, if you buy a gold bar for £5,000 and sell it for £6,000, your capital gains are £1,000. The £1,000 is the taxable amount, not the full £6,000.
There is a ‘capital gains tax’ threshold allowance for each person resident in the United Kingdom. What does this mean? You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance ( the Annual Exempt Amount). The threshold for 2021/22 is £12,300.
You will not have to pay CGT if the first £12,300 per financial year comes from profits from selling assets like gold bars and coins. After that, the tax rate is 10% if you pay basic income tax and 20% if you pay the higher rate for anything over that threshold.
Capital Gains Tax on Gold Coins
CGT is only applicable to non-legal tender gold or silver in the above manner, for example, bars. Gold coins are exempt from CGT if they are legal tender in the UK.
For a gold coin to be considered legal tender, it must be produced by The Royal Mint. As a result, they are free of capital gains tax and may be bought and sold without restriction. This is true regardless of the amount or value of the transaction, making it an appealing choice for investors.
What is Inheritance Tax?
What is Inheritance Tax in the UK? Inheritance Tax is a tax levied on a person’s estate who has passed away. The amount of tax payable depends on the estate’s value and the relationship of the deceased to the beneficiaries. However, there are pre-defined limits in place that define what is considered tax-free.
What assets are Exempt From Inheritance Tax in the UK?
There is usually no UK inheritance tax to pay if:
- the value of your estate is below the £325,000 limit
- you leave everything above the £325,000 limit to your spouse, civil partner, amateur sports club or a charity
- If your property is given to your children, the limit rises to £500,000.
What is an estate, and what is included in it?
Your estate includes everything you own at the time of your death:
- property and land
- savings and investments
- household possessions
- life insurance policies
How is Gold & Inheritance Tax affected?
Gold is a tax-effective and practical method of conveying wealth to family members, particularly when it comes to estate planning. It’s private when you give gold as a present, so there’s no legal necessity to register or transfer ownership if you gift it. Leaving your money in the bank makes it lose value over time due to low-interest rates and inflation. Gold is an excellent way to protect your money from losing value. It’s a tangible asset that can grow without being taxed.
What is an ‘Inheritance tax gift’ allowance?
You can give money or personal items away tax-free. Each year, this is possible, and the amount you can contribute tax-free varies depending on which perks you take advantage of.
You can give an ‘Inheritance tax gift’ under current tax rules if you wish to limit the inheritance tax owed. Each year, you can give £3,000 to a loved one without it affecting your estate when you die. If you share more than that, a sliding scale of taxes will be paid if you die within the next seven years. After those seven years, no tax will be payable.
You can give gifts up to £3000 to one person or split the allowance of £3000 amongst several people. HMRC also allows you to carry over the unused annual exemption to the following tax year. However, this is limited to only one tax year.
Are UK Gold Sovereigns and Britannias exempt from tax?
UK residents benefit from tax exemptions on many different types of legal tender gold bullion coins. The most common coins are the Gold Sovereign and 24k Gold Britannia, exempt from Capital Gains Tax (CGT). In addition, UK legal tender gold coins are also exempt from VAT.
In Summary: Is gold exempt from Inheritance and Capital tax, and is it worth investing in gold bullion?
Gold is a tax-effective and practical method of conveying wealth to family members even after death, and it can be used to protect money from losing value.
Investing in gold bullion is a popular choice for those looking for a safe and effective way to preserve their wealth. Gold is a valuable commodity that has been used as a form of currency, jewellery, and investment for centuries. While the price of gold can fluctuate in the short term, it has a history of increasing value over the long term. This implies that the worth of your inheritance is likely to rise even after you are gone.
Gold is also a practical way of diversifying your investment portfolio. Its performance is often uncorrelated with other asset classes.
Disclaimer: Precious metal prices can be volatile and the value of your metal may go down as well as up. No responsibility can be accepted by Ajjore Limited T/a Bullionjoy for any loss caused by acting on information we have provided. Disclaimer: This blog is the personal viewpoint of one individual. Before investing, customers should conduct their own independent research and get advice from experts. We are not a source of investment advice; therefore, the contents of this article should not be considered investment advice.