What VAT is on Bullion Gold and Silver?
The topic of gold, silver, and platinum VAT is complex in the same way as many other tax issues. VAT on Bullion is no different since various bullion coins and bars are considered differently.
If gold and silver bullion are subject to VAT, let us look at the different types of bullion and how they are taxed and then look at exemptions.
What is Bullion?
Bullion is a term for precious metals such as gold, silver, and platinum that trade at a small premium over their actual metal value. Some common forms of bullion include ingots, coins and bars.
What is Value Added Tax (VAT)?
VAT in the UK is governed by HMRC (Her Majesty’s Revenue and Customs) and is administrated by various laws. It is charged on most goods and services, including bullion coins and bars.
Standard VAT is currently charged at 20%, this is included in the price of the product you are buying; however, there are 5% and 0% VAT rates for certain items.
All forms of gold bullion, including sovereigns and Britannia, are exempt from VAT. However, silver and platinum bullion is taxable.
Why is no VAT Charged on Investment Gold Anymore?
Before 1st January 2000, the UK charged VAT on gold sales. However, this changed because of the discrepancy between rules in the European Union. For example, some countries in the EU did not charge VAT on gold at all or charged it at a very low rate, which meant that the UK was at a disadvantage compared with other EU member states.
Therefore, the UK government abolished VAT on investment gold to ensure equal tax treatment within the European Union, this includes gold bullion available in different shapes and sizes.
What classes as investment Gold in the UK?
HM Revenue and Customs define investment gold as the gold of purity not less than 995 thousandths in the form of a bar, or a wafer, of a weight accepted by the bullion markets.
This implies that gold coins and 24-carat gold bullion bars with a purity of more than 22 carats are known as investment gold.
Why is Silver not exempt from VAT?
We have been asked why silver is not exempt from VAT just as gold is from time to time. Of course, if you buy physical gold bullion (also investment-grade coins), there will be no VAT to pay, but for silver, it is different.
VAT at the standard rate is payable for Silver Coins and Bars.
Even if you buy investment-grade silver coins, there will be 20% VAT to pay upon physical delivery of your silver coins or bars in the UK. It is not easy to explain why gold is exempted, but silver is not. Many customers see this as an unjust principle; however, the 20% VAT on silver bullion is stipulated by HMRC.
What if I’m VAT registered?
If you are a VAT-registered business, you can get the VAT back on silver coins ( including Queen Beast Series) or bars that you purchase, provided the items have been purchased for and on behalf of the business. To do this, make sure to check with your accountant and ensure the purchase is made on behalf of the business. Unfortunately, we cannot give you specific financial advice for your situation, as we are not financial service advisors or accountants.
Are silver coins from the Royal Mint VAT exempt?
Unfortunately, the silver coins from the Royal Mint are not exempt either from VAT, the same tax rules apply: Royal Mint-minted silver coins and bars are still subject to 20% VAT. However, this should not be confused with Capital Gains Tax (CGT)
The difference between Value Added Tax (VAT) and the Capital Gains Tax (CGT) for Silver coins produced by Royal Mint is that VAT is a tax you pay on something you buy, while CGT is a tax you pay on profits you make from selling something. Usually, CGT is paid on profits made on investments such as stocks, property, and bullion.
In the UK any coin with a face value printed on and holding legal tender status is regarded as currency and as such exempt from CGT. Most of the bullion coins minted by The Royal Mint hold legal tender status and therefore are Capital Gains Tax Free, this includes coins minted in gold, silver or platinum. Any coin we offer which is exempt from CGT is made clear as part of the product information. You can read our guides for further information about capital gains tax.
Is silver bullion a good investment?
Silver investment is seen as a long term rather than short term investment. There are a number of good reasons to invest in silver, one of them being it’s use as an industrial metal in various applications and silver’s relative price to gold, also commonly referred to as Gold Silver Ratio.
If you have already invested in gold bullion and you want to diversify your precious metals portfolio, then silver is an excellent choice. The price of the two metals has followed similar trends over the short term, but gold is substantially more expensive than silver.
When looking to buy silver, it is important to remember that at times the price of silver changes more quickly than the price of gold. You also have to consider the price of silver compared to the price of gold. Currently, 1 ounce of silver is rough 1/7th the price of gold, which makes it easier to start investing in silver bullion.
Can silver be used as an inflation hedge?
Inflation is a rise in the price of goods and services over time. The phenomenon of inflation can cause real strain on individual finances as you find that you are able to purchase less number or items or services over time with the same amount of money. Precious metals, including silver, are traditionally seen as a protection and a hedge against inflation over time.
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. We do not offer investment or tax advice and recommend that you conduct your own independent research before making any investment decisions.