CGT Rates To Rise

[MickB]

Would it be advisable to offload any non-UK coins sooner rather than hanging onto them? 

[HerefordBullyun]

6 minutes ago, MickB said:

Would it be advisable to offload any non-UK coins sooner rather than hanging onto them? 

A certainty unless you are looking to move to that said country...

[modofantasma]

17 minutes ago, Bigmarc said:

Can you still use your wife's allowance? If married that is

Next financial year the total is set to drop to £12k combined and 6k for the following year. 

[MickB]

1 minute ago, HerefordBullyun said:

A certainty unless you are looking to move to that said country...

Well, this will be interesting to see how many people will be trying to offload their coins before the new rates cut in. Maybe even dealers will struggle to sell theirs. 

[modofantasma]

12 minutes ago, MickB said:

Would it be advisable to offload any non-UK coins sooner rather than hanging onto them? 

I wouldn't panic sell but what if we were in a digital currency system and cash sales were off the table in a few years time. Unless you're selling at a loss or break even it would appear that CGT free coins currently make more sense for stacking 

[HerefordBullyun]

2 minutes ago, MickB said:

Well, this will be interesting to see how many people will be trying to offload their coins before the new rates cut in. Maybe even dealers will struggle to sell theirs. 

i think it going to effect some, be interesting to see what Mr @LawrenceChard says when the time comes.... but maybe a tactical move to increase his stockings (instead of those budgie smugglers he wears) in CGT free coins instead, its the main reason that I stack brits and sovs

Edited November 18, 2022 by HerefordBullyun

[MickB]

It might even kill off the interest in collecting/stacking foreign coins in the end. Silver will have to go sky high in price for it to be worthwhile keeping all foreign coins. 

Another way of bleeding us dry. 

[bluemoon]

If bought before CBDCs, how would this even be policed? Say you sell a Krug for £4,000 (we wish!) how would anyone know if you bought it for £50 or 3,500?

[Bigmarc]

3 minutes ago, bluemoon said:

If bought before CBDCs, how would this even be policed? Say you sell a Krug for £4,000 (we wish!) how would anyone know if you bought it for £50 or 3,500?

I should imagine if you get investigated, you would have to prove it. I've had a couple of visits from HMRC over the years, not the friendly bunch.

[ArgentSmith]

31 minutes ago, bluemoon said:

If bought before CBDCs, how would this even be policed? Say you sell a Krug for £4,000 (we wish!) how would anyone know if you bought it for £50 or 3,500?

I wouldn't be surprised if lower thresholds were set for Bullion dealers and Banks to report activity 🤔

[Silverlocks]

 I think the CGT free thing on legal tender is more of a side effect because captial gains have to be measured with reference to currency.  From the Taxation on Chargeable Gains Act, it seems to all revolve around this clause.

TCGA92/S21 (1)(b)

Currency in sterling is not an asset for capital gains purposes. It is the unit by reference to which capital gains are measured.

That means that anything that is recognised as sterling is not an asset but money, and really the whole concept of capital gains relies on the concept of money so I don't think they can diddle the act to make money taxable as an asset, especially given that it's already taxed as income or revenue/profit through other means. 

What they might be able to do is to stop gazetting mintages of precious metal coins with a monetary value, relegating it to producing rounds or bullion bars with a PM content but no face value.  However, in order to ban CGT exemption on existing precious metal coinage, they would have to pass an act of parliament that removed the legal tender status of all existing gold and silver coins, including sovereigns. 

As with any other removal of obsolete currency from circulation, The Bank of England would probably be obliged to implement an exchange or buy-back programme.  Nobody is going to sell sovereigns back to the Bank of England at their face value of £1 each and any attempt to force it would generate lynch mobs - or at least very strongly worded letters to the editor.  Offering buy-back at some value based on spot would far outweigh any possible tax revenue from capital gains on the items.  The alternative is to set a legal precedent that the government can arbitrarily withdraw the legal tender status of any Sterling denominated currency without compensation, which would have a catastrophic effect on the international credibility of the GBP.

So, I think (a) the CGT exemption is largely a side effect of other legislation that had bigger fish to fry, and (b) actually repealing its CGT exemption status would be unpopular and likely more costly than any additional tax revenue it might attract.

Edited November 18, 2022 by Silverlocks

[ArgentSmith]

2 hours ago, Silverlocks said:

However, in order to ban CGT exemption on existing precious metal coinage, they would have to pass an act of parliament that removed the legal tender status of all existing gold and silver coins, including sovereigns. 

 

Have been pondering this, legal tender is also exempt from VAT however there is an exemption for numismatic coins and a further exemption from the exemption for investment gold 🙄

If inflation persists and pms moon the Government will do whatever they want regardless of how unpopular it is with the small% of the population who seek refuge in PMs imo

Who would have thought they would slash CGT allowance by 75%, freeze income tax thresholds for 5 years, with inflation running this hot!!! it's crazy.

[CANV]

they will end the CGT exemption on 'investment grade coins' as and when it suits them. 

[Silverlocks]

2 hours ago, ArgentSmith said:

Have been pondering this, legal tender is also exempt from VAT however there is an exemption for numismatic coins and a further exemption from the exemption for investment gold 🙄

Silver coins are not exempt from VAT, even though they have a face value.  I think the VAT exemption exists for gold, largely because of its use in large state to state or bank to bank transactions.  You can't put VAT on gold without screwing over the big boys, which is likely the reason it hasn't happened.

As an aside, the presence of VAT on gold in Indonesia has been a bone of contention for some time, and it appears that this was abolished recently.

2 hours ago, CANV said:

they will end the CGT exemption on 'investment grade coins' as and when it suits them. 

From what I can tell the 'definition of pre-1837 'numismatic coins' is actually an exemption from their status as legal tender rather than a specific inclusion of liability for CGT.  I don't think there is a CGT exemption on coins as such, just something that happens as an unavoidable side effect of other legislation that defines legal tender and requires money to be used as a basis for measuring capital gains.  

Investment grade gold (for the purposes of a pension such as a SIPP) is actually restricted to gold bars of LBMA spec (.995 fine etc., although they don't have to be 400 oz bars) - you can't hold coins of any sort in a pension.  I don't think there is actually such a thing as an 'investment grade coin' in legal terms, only 'investment grade gold' and 'legal tender', which are two different things.  In the case of a pension, they are protected from capital gains tax through the pension itself, rather than being intrinsically exempt from CGT.  The Sharps Pixley web site goes into this in some detail under 'Pensions.'

I think that the main reason that gold coins are tolerated as legal tender is that in order to revoke that status the government would be put in a dilemma.  Either they would have to offer a trade-in programme in much the same way as they do for obsolete banknotes, or they would establish a legal precedent that they could revoke the legal tender status of money without having to offer a right of exchange. 

In the former case, nobody in their right mind would cash gold coins in for their face value; any programme offering the option to trade Brits in for £100, or sovereigns in for £1 would inevitably be viewed as taking the piss by the news media and the public at large and is just begging to be spun as a shakedown by the political opposition.  The other option would be to offer a buy back at the spot price of the gold or something similar, which would likely be far more expensive than any tax revenue they might gain from instituting CGT on the coins.

In the latter case, the precedent would be established that H.M. Government could arbitrarily revoke the legal tender status of currency without having to buy back the obsolete money.  That would seriously damage the credibility of the GBP in international markets, likely tanking it and exacerbating foreign debt problems.  

My conjecture is that the CGT exemption for RM coins is actually here on sufferance, rather than by design, as they can't abolish it without side effects that would be far more expensive.  It might not stop them from trying it on if they get desperate enough, but I think that there is not likely to be a net benefit to the tax base from doing so.

Edited November 19, 2022 by Silverlocks

[LawrenceChard]

16 minutes ago, Silverlocks said:

My conjecture is that the CGT exemption for RM coins is actually here on sufferance, rather than by design, as they can't abolish it without side effects that would be far more expensive.  It might not stop them from trying it on if they get desperate enough, but I think that there is not likely to be a net benefit to the tax base from doing so.

The CGT examption is not for Royal Mint coins, it is for legal tender sterling currency.

It just so happens that the Royal Mint make all or most UK coins, so those are CGT exempt, but not because they are made by the Royal Mint, but because the are sterling currency.

The Royal Mint also makes coins for a number of other countries. These are not sterling currency, therefore are not exempt from CGT despite being made by the Royal Mint.

You may find some of this useful:

https://www.chards.co.uk/blog/capital-gains-tax-implications-2006/960

There are other articles on our website about CGT, simply search our site for "cgt".

😎