Capital gains tax questions

[generalist]

I'm in the process of putting together records of my PM purchases and sales for capital gains tax purposes. I've seen that HMRC says that for shares and crypto what you buy is pooled together, and when you sell some the capital gain is worked out on a proportional basis. My question is, does pooling apply to gold and silver?

For example:

If I bought a Krugerrand one day and a gold philharmonic on another day, would I pool those together?

If the answer to that example is no, what about if I bought maples one day and another load of maples another day? Would those be pooled or must they be considered separate?

I suspect the answer is that pooling does not take place, although I'd like some confirmation especially as it does seem to make sense at least when buying the same type of coin on a regular basis.

Another completely separate question. Do gold and silver count as chattels? This seems relevant because it appears only a chattel disposal amounting to at least £6,000 is counted. Although gold and silver appear to meet the definition of a chattel the HMRC guidance doesn't include gold and silver in their examples of chattels and I can't find any guidance specific to gold and silver. Also, none of the discussion I've read about CGT for gold and silver have mentioned this £6,000 minimum disposal, making me think they're not chattels.

Many thanks

Edited June 7, 2020 by generalist
Error correction

[jultorsk]

Contains no tax advice. 😉

I believe the Annual Exempt Amount (AEA) is currently £12,300. 

https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances

Some additional, perhaps useful info. 

https://www.royalmint.com/invest/bullion/discover-bullion/capital-gains-tax-on-investments/

[sovereignsteve]

Interesting topic and questions, I look forward to reading some enlightening answers.

[Martlet]

Assume you have to pool gold or silver, those are the rules for other assets and HMRC likes consistent rules.  I think there may be an argument that as a specific coin can be identified (unlike a share), you can say when that was purchased separately so calculate profits (or losses) accordingly.  I dont know if this is a valid defence. 

It should be noted pooling benefits us in a rising market.  Later purchases reduce the profit of earlier purchases when you sell them, so you are taxed on the higher pooled average value rather than the original purchase value.  Inversely, pooling does have the affect of reducing the benefits of averaging down from a falling market. 

This is only a problem when you have at least 12k profit (current allowance), so its an unlikely problem for most. Keep a record and sort it out then. 

Gold and silver are not chattels, classified as either money or investment. Chattels is specifically to cover everything else. 

[generalist]

Thanks. I think I'd prefer to pool them so that I don't have to keep track of individual coins.

On the question of chattels, it was this page which alerted me to chattels. https://www.bullionbypost.co.uk/info/legal-tender/ It says that pre-1837 sovereigns are considered chattels. It also says a specific exemption applies to them. Does anyone know what that exemption is or is the exemption that they're chattels? If pre-1837 sovereigns are chattels does the same principle apply to pre-1947 shillings? I'm interested to know that because I've bought some of those off this forum!

Edited June 7, 2020 by generalist

[Seasider]

This comes from the HMRC manual (CG78305)

 

"Foreign currency

Currency may take the form of notes, coins or travellers cheques.

You may need to determine the location of currency if you are dealing with an individual charged on the remittance basis, see CG25300+. There is no rule in TCGA92/S275 specifically governing the location of currency. You should apply the rule in Section 275 (b) for tangible moveable property.

Coins are to be regarded as currency only if they are legal tender at the time of their acquisition or disposal. Coins which are currency but not sterling, for example Krugerrands, are chargeable assets.

Sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt because of TCGA92/S21 (1)(b).

Coins (including pre- 1837 sovereigns) which are not legal tender are not currency. They are chattels and qualify for the chattels exemption in TCGA92/S262. A gain on such a coin is therefore exempt if the disposal consideration does not exceed the limit in CG76573. You should bear in mind the possibility that the disposal of more than one coin may constitute the disposal of a `set’, see CG76631+.

The chattels exemption does not apply to coins which are non-sterling currency, TCGA92/S262 (6)(b)."

and then a bit from CG76573

"There is no chargeable gain on the disposal of a single chattel (tangible moveable property) if the gross consideration does not exceed £6,000.

Where the consideration exceeds £6,000 the chargeable gain may be restricted, see CG76577."

[generalist]

Thanks for that. That's very interesting to read. Given that generic rounds and bars are not currency (apart from the execptions) then they're presumably classed as chattels and don't even enter the equation unless any individual round/bar is sold for over £6,000. (If any form part of a set they must be taken together though.) I'll do some further research though.

That HMRC manual looks like the place to go. I'll take a look at what it says about currency. I'm starting to think pooling will be by currency (USD, euros, etc.), but that's just a guess and I'll see what the guidance says.

One thing I wrote above wasn't quite right. A chattel disposal is a chargeable gain if the disposal (not the profit) is for over £6,000. I'll edit that to correct it.

[sixgun]

On 07/06/2020 at 20:41, Seasider said:

This comes from the HMRC manual (CG78305)

"Foreign currency

Currency may take the form of notes, coins or travellers cheques.

You may need to determine the location of currency if you are dealing with an individual charged on the remittance basis, see CG25300+. There is no rule in TCGA92/S275 specifically governing the location of currency. You should apply the rule in Section 275 (b) for tangible moveable property.

Coins are to be regarded as currency only if they are legal tender at the time of their acquisition or disposal. Coins which are currency but not sterling, for example Krugerrands, are chargeable assets.

Sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt because of TCGA92/S21 (1)(b).

Coins (including pre- 1837 sovereigns) which are not legal tender are not currency. They are chattels and qualify for the chattels exemption in TCGA92/S262. A gain on such a coin is therefore exempt if the disposal consideration does not exceed the limit in CG76573. You should bear in mind the possibility that the disposal of more than one coin may constitute the disposal of a `set’, see CG76631+.

The chattels exemption does not apply to coins which are non-sterling currency, TCGA92/S262 (6)(b)."

and then a bit from CG76573

"There is no chargeable gain on the disposal of a single chattel (tangible moveable property) if the gross consideration does not exceed £6,000.

Where the consideration exceeds £6,000 the chargeable gain may be restricted, see CG76577."

This post you made should be pinned to the top of the thread.

UK Coins
Pre-1837 = Chattels exemption
1837 and after = Coins = CGT free.

Non -UK Coins
Non legal tender coins = Chattels
Legal tender coins = Chargeable under CGT rules.

Non-coin Bars - not coins will i presume be chattels = Chattels exemption.

So basically HMRC want to stiff you if you make more than the CGT limit on your legal tender non-UK coins.
Well there are way and means to sell across years, sell back and forth between family (you trust) so as to use up the whole family's CGT allowance every year. 


 

[JohnA1]

1 hour ago, sixgun said:

So basically HMRC want to stiff you if you make more than the CGT limit on your legal tender non-UK coins.



 

To me it looks like they want you to stiff yourself - voluntarily

[Thelonerangershorse]

Best tax advice I've seen was a tweet by an american woman,

My 6 year old asked how tax works, so I gave him a large bag of M&M's and said "now you have to give me some back, but I'm not going to tell you how many, and if you get the answer wrong, you go to prison"