CGT on gold proof coins-private sales

[Jeffers46]

Good Morning you knowledgeable lot,

I was wondering if anyone can help me- I have sold a gold proof coin for a profit, do I have to declare it on a Capital Gains tax submission for a private sale between 2 private citizens?

Best wishes,

Jeffers

[Shep]

Depends entirely on the coin. If it’s a U.K. Royal Mint release with a face value then this answers it quite nicely from atkinsons website.

“All coins produced by the Royal Mint that qualify as British legal currency are exempt from Capital Gains Tax. This includes all silver and gold Britannia coins and post-1837 gold sovereign coins, including proof sets. You can make unlimited tax-free profit on investments of any value on these coins.”

https://atkinsonsbullion.com/help-advice/capital-gains-tax-your-questions-answered

TLDR: If it’s a U.K. release by the Royal Mint with a face value then you’re fine.

(Someone correct me if I’m wrong, but that’s my understanding of it).

Edited January 22, 2022 by Shep

[NewCoins]

I think that's right in normal circumstances.

But, its also worth considering badges of trade, which I think @BackyardBullionmentioned a while ago for a similar question.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

 

[BackyardBullion]

The following is not formal tax advice. This is just my own understanding of the rules. Please seek professional advice if any of what I say does not make sense.

If the total profits from your capital gains is less than your annual allowance then you don't have to even report it or record it on your tax return.

Personal allowances are £12,300 per person.

If you are married assets can just be gifted to a spouse thereby making a married couples allowance £24,600

Remember, this is PROFIT allowance.

Any UK coin by the royal mint is CGT exempt so you don't even include it in the calculations.

Example.

You sell a gothic crown and make £10,000 profit, this does not count at all.

You sell a 100 oz gold bar and make £10,000 profit, this counts but if this is all of your gains in one year it doesn't need to even be reported.

Let's say you sell a second 100 oz gold bar for another £10,000 profit.

Your total profit is £20,000 

You will need to declare this on your tax return.

You will pay tax on the £7,700 that is over the threshold (rate depends on your income tax status).

If you were married, that second bar could be your partners allowance. So neither of you need to declare as each of you have only made £10,000 profit.

 

[paulmerton]

The proof coin set exemption example seems like a grey area to me.

Of course the coins are exempt, but what about the fancy box and other presentation material they come with that forms an intrinsic part of their value?

Before you know it you'll have sneaky people making massive tax free profits by selling fancy expensive boxes as long as they bundle a single small CGT-exempt coin inside them.... wait, hang on a minute!  https://www.royalmint.com/invest/bullion/bullion-coins/gold-coins/19-coin-sovereign-collection-case--1-coin/

[sixgun]

The OP says this was a private sale. So no need to get into badges of trade.
As BYB says a UK taxpayer have a CGT allowance of £12,300 in the current year.
If the coin is a UK coin it is tax free. i think considering the box is unnecessary. You sold the coin. The box came with it. You say it was free. No-one can say it was anything else. If this is a private sale no-one knows exactly what you sold or how you sold it.
 

Edited January 22, 2022 by sixgun

[NewCoins]

What exactly is a private sale?

[sixgun]

1 hour ago, NewCoins said:

What exactly is a private sale?

If i sold you a bar of silver it would be a private sale. i am selling as a private individual, not as a business, not part of my trade. If Atkinson's sold you a silver bar this would be a business sale.

[NewCoins]

57 minutes ago, sixgun said:

If i sold you a bar of silver it would be a private sale. i am selling as a private individual, not as a business, not part of my trade. If Atkinson's sold you a silver bar this would be a business sale.

So in theory, I could make millions per year making "private sales" of legal tender coins, and not pay a penny of any kind of tax ?

[Petra]

Until they catch you out!!!🙁

[NewCoins]

1 minute ago, Petra said:

Until they catch you out!!!🙁

Catch you out for what? They are "private sales".

[Petra]

For earning above your tax free limit and not paying tax on it. Private or not you are making money, I work for myself, do you think I could get away without paying tax by saying it’s private!!

[sixgun]

18 minutes ago, NewCoins said:

So in theory, I could make millions per year making "private sales" of legal tender coins, and not pay a penny of any kind of tax ?

Well if you were selling £millions in coins you would be buying and selling coins at some pace - that is what a trader would do. You would be defined as a business.
Exactly what the threshold is i don't know but £millions would go way over that threshold. If you buy coins with the intention of selling in the relatively near future and at a profit - you have stepped into the realm of a trader and then it becomes a business. When i buy metal i buy it if i think it is good value. i hope one day i will realise a profit on it but my primary goal is anything but a quick turnover.

3 minutes ago, Petra said:

For earning above your tax free limit and not paying tax on it. Private or not you are making money, I work for myself, do you think I could get away without paying tax by saying it’s private!!

There is no CGT on UK coins - so there is no limit. You are talking about your trade / business / living. Buying and selling a few coins as you develop a collection is not a living. 

Edited January 22, 2022 by sixgun

[NewCoins]

1 minute ago, Petra said:

For earning above your tax free limit and not paying tax on it. Private or not you are making money, I work for myself, do you think I could get away without paying tax by saying it’s private!!

Exactly. Which I think if anyone is doing it regularly, should consider the badges of trade.

If not, then I wouldn't worry.

It's clearly all subjective, but, the last thing anyone should want is HMRC investigating you.

[NewCoins]

2 minutes ago, sixgun said:

Well if you were selling £millions in coins you would be buying and selling coins at some pace - that is what a trader would do. You would be defined as a business.
Exactly what the threshold is i don't know but £millions would go way over that threshold. If you buy coins with the intention of selling at a profit - you have stepped into the realm of a trader and then it becomes a business.

There is no CGT on UK coins - so there is no limit. You are talking about your trade / business / living. Buying and selling a few coins as you develop a collection is not a living. 

I think that's the point of the badges of trade. When as a private individual, you should be considered a business/self employed for tax purposes

EDIT. I don't even think its about a threshold. It's about the behaviour. For example, I am going to buy this thing, sell it quickly with a view to making a profit. If for example you "improve it" by making it better (perhaps grading) and or borrowing money to make the purchases, then perhaps you tick more of the business boxes.

 

Edited January 22, 2022 by NewCoins

[Petra]

If you are seen to be above the current tax threshold they can come looking, then up to you to explain

 

 

 

[NewCoins]

Just now, Petra said:

If you are seen to be above the current tax threshold they can come looking, then up to you to explain

 

 

 

I suspect most people use up their tax free threshold on income/dividends etc.

[Jeffers46]

Thank you all for your most helpful comments.

 

I’ve had a good year in crypto and got a letter from HMRC after withdrawing to FIAT from coinbase. I’m really close to having to pay some CGT. It is an absolute nightmare trying to work out everything in the crypto world so I’m using an app that calculates it for you and produces a tax report. You are only taxed on the profit above that threshold, not the first £12,300. 
 

I sold my silver 2oz QB’s ten-coin set earlier in the year and my one ounce gold proof completer. Plus some £20 First World War silver coins. (Much to the annoyance of some on here it would seem 😂). All of my buyers were very happy. 

Do I have to let HMRC know and mention they are CGT free as stated on the RM’s and other websites? Or just exclude them altogether? 

22 minutes ago, NewCoins said:

I suspect most people use up their tax free threshold on income/dividends etc.

Personal income tax is an entirely separate issue 👍🏼

[NewCoins]

3 minutes ago, Jeffers46 said:

 Personal income tax is an entirely separate issue 👍🏼

Indeed it is. The thread went a bit off in the direction of presumably being a business director.

If you are only worried about CGT it doesn't sound like you need to worry. I personally wouldn't say anything 

[sixgun]

28 minutes ago, Jeffers46 said:

I sold my silver 2oz QB’s ten-coin set earlier in the year and my one ounce gold proof completer. Plus some £20 First World War silver coins. (Much to the annoyance of some on here it would seem 😂). All of my buyers were very happy. 

Do I have to let HMRC know and mention they are CGT free as stated on the RM’s and other websites? Or just exclude them altogether? 

i would say you don't need to mention your coin sales. This doesn't sound like the antics of a coin dealer. You sold a few coins from your collection. All of them were UK coinage. Nothing to see here. 

[Midasfrog]

Boats are very unstable craft and the HMRC know and understand the amount of gold a small vessel can hold 🤣