Is your underweight sovereign subject to capital gains tax?

[GoldDiggerDave]

This topic has been talked about a few times,  I have been looking at the minimum weights for coins especially sovereigns once a sovereign becomes worn and weighs less than 7.93787g it is then  classed as under weight, but also at this point it loses it's legal tender status.    This is the coinage act of 1971 

......"but gold coins shall not be legal tender if their weight has become less than that specified in Part I of Schedule 1 to this Act as the least current weight".

 I doubt the tax man would go to the effort to weigh every single coin in your stack, just found this to be interesting. 

 

 

Coinage Act 1971.pdf

[modofantasma]

26 minutes ago, GoldDiggerDave said:

doubt the tax man would go to the effort to weigh every single coin in your stack, just found this to be interesting

Could easily weigh both of mine 😏

[LawrenceChard]

4 hours ago, GoldDiggerDave said:

Is your underweight sovereign subject to capital gains tax?

This topic has been talked about a few times,  I have been looking at the minimum weights for coins especially sovereigns once a sovereign becomes worn and weighs less than 7.93787g it is then  classed as under weight, but also at this point it loses it's legal tender status.    This is the coinage act of 1971 

......"but gold coins shall not be legal tender if their weight has become less than that specified in Part I of Schedule 1 to this Act as the least current weight".

 I doubt the tax man would go to the effort to weigh every single coin in your stack, just found this to be interesting. 

 

 

Coinage Act 1971.pdf 156.72 kB · 1 download

That is a good question, and interesting, but there is a very quick, simple, and even better answer:

https://taxfreegold.co.uk/whatisinvestmentgold.html

What is Investment Gold?

For the purpose of the new VAT exemption, "Investment Gold" is defined as:

(a)
Gold of a purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets;

(b)
A gold coin minted after 1800 that-
is of a purity of not less than 900 thousandths,
is, or has been, legal tender in its country of origin, and
is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin; or

(c)
A gold coin of a description specified in Notice 701/21A Investment gold coins.

😎

[LawrenceChard]

4 hours ago, GoldDiggerDave said:

Is your underweight sovereign subject to capital gains tax?

This topic has been talked about a few times,  I have been looking at the minimum weights for coins especially sovereigns once a sovereign becomes worn and weighs less than 7.93787g it is then  classed as under weight, but also at this point it loses it's legal tender status.

Has King Charles been on a diet in preparation for his Coronation?

😎

[CollectForFun]

8 hours ago, LawrenceChard said:

That is a good question, and interesting, but there is a very quick, simple, and even better answer:

https://taxfreegold.co.uk/whatisinvestmentgold.html

What is Investment Gold?

For the purpose of the new VAT exemption, "Investment Gold" is defined as:

(a)
Gold of a purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets;

(b)
A gold coin minted after 1800 that-
is of a purity of not less than 900 thousandths,
is, or has been, legal tender in its country of origin, and
is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin; or

(c)
A gold coin of a description specified in Notice 701/21A Investment gold coins.

😎

Aren't those rules for VAT exemption, rather than CGT exemption?

[LawrenceChard]

6 minutes ago, CollectForFun said:

Aren't those rules for VAT exemption, rather than CGT exemption?

Yes indeed, and well spotted.

I think though that HMRC would need to be extremely avaricious to try to extort CGT on underweight specimens, but I suppose that is not saying much!

😎

[Bratnia]

Legal tender has a strict definition. It means if you have a court awarded debt against you, if someone tries to settle and they're paying in legal tender you cannot refuse it. That 1971 act clearly indicates that gold coins shall not be legal tender if their weight has become less than .... 7.93787g such that it could be refused as part payment of a court awarded debt settlement.

But as a single coin it could still be exempt from CGT under the chattel exemption 

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76573  

Quote

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

A chattel is movable personal property that can be borrowed against using a chattel mortgage i.e. in this case depositing gold as a security to secure a chattel mortgage. 

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg78305

Quote

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

It struck me that on that basis however, then surely American Eagles, Canadian Maples that are not legal tender could be individually sold (for less than £6K) and not be liable to CGT - but then I saw

Quote

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

and sovereigns are £1 sterling currency as is a Britannia £100 sterling currency

Edited February 21, 2023 by Bratnia

[Midasfrog]

Tax man : Have you got any overweight sovereigns ?

Me : Yes a few 🤔

Tax man : May I inspect them ?

Me : Of course you can , would you like to use my scuba gear or do you have your own 😁

[GoldDiggerDave]

9 hours ago, Bratnia said:

Legal tender has a strict definition. It means if you have a court awarded debt against you, if someone tries to settle and they're paying in legal tender you cannot refuse it. That 1971 act clearly indicates that gold coins shall not be legal tender if their weight has become less than .... 7.93787g such that it could be refused as part payment of a court awarded debt settlement.

But as a single coin it could still be exempt from CGT under the chattel exemption 

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76573  

A chattel is movable personal property that can be borrowed against using a chattel mortgage i.e. in this case depositing gold as a security to secure a chattel mortgage. 

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg78305

It struck me that on that basis however, then surely American Eagles, Canadian Maples that are not legal tender could be individually sold (for less than £6K) and not be liable to CGT - but then I saw

and sovereigns are £1 sterling currency as is a Britannia £100 sterling currency

I nominate you as TSF accountant.........!