capital gains tax(cgt) when selling coins in the uk

a briefing of how capital gains tax can affect coins sales:

capital gains tax abbreviated cgt is payable in the uk on the sale of coins.

coins minted by the royal mint are exempt from cgt. these include sovereigns

and all coins with a pound(£) denomination sold for their bullion value.

each and every tax year there is a capital gains allowance for uk residents

which currently is £11,100. the tax rate on profits outside of this allowance is

currently 18% and 28% depending on your taxable income. the cgt allowance

available each year is for the combined cgt due for all items in a particular

year, not just for coins.

in theory capital gains tax on £10k sold at £30k is as follows:

total profit on sale = £30k-£10k = £20k

total cgt taxable profit = total profit minus cgt allowance(£11,100)

which is £20k-£11,100 or £8,900

depending on you taxable income, cgt due will then be:

£8,900(18%) = £1,602

or £8,900(28%) = £2,492

uk taxes can be complicated to work out and it's preferable to keep receipts

or maybe only trade in cgt free coins or trade in coin amounts that are

obviously within each tax years cgt allowance. sometimes coins can be held

for many years or decades before a sale(depending on the strategy used).

this can affect the cgt due immensely due to inflation. £1 worth of foreign

gold bullion bought 100 years ago would be currently priced at ~£200. on

the sale of this coin 99% of your profit or £199 would be liable for cgt. most

of the £199 in profit is just inflation over the last 100 years, meaning you are

not 200x richer but are taxed on 99% of your original wealth. cgt in this case

is a tax on accumulated inflation. long term holders of coins should not

dismiss cgt free coins lightly.

further reading at www.gov.uk is recommended.

HH