Interesting question about Sovereigns.

[Urlcool]

Hi everyone, 

Got a interesting hypothetical question. If Im right a full gold Sovereign has a UK currency value of £1.  This the reason for being tax free when coming to being sold.  

Now, if I was to pay one of my staff with a £10 note as part of their salary. That £10 would be subject to income tax, NI etc.  (not taking tax allowances into consideration).  

Now instead, if I was to pay the same member of staff with 10 full sovereigns that would in theory be the same as the £10 note for tax purposes as sovereigns have a vaule of £1. 

What do you think?

 

 

[PrivateStacker195]

Sign me up! 

[dicker]

4 hours ago, Urlcool said:

Hi everyone, 

Got a interesting hypothetical question. If Im right a full gold Sovereign has a UK currency value of £1.  This the reason for being tax free when coming to being sold.  

Now, if I was to pay one of my staff with a £10 note as part of their salary. That £10 would be subject to income tax, NI etc.  (not taking tax allowances into consideration).  

Now instead, if I was to pay the same member of staff with 10 full sovereigns that would in theory be the same as the £10 note for tax purposes as sovereigns have a vaule of £1. 

What do you think?

 

 

I’m afraid this won’t fly - ever.

[Kitalon]

Lovely hypothetical question but just because a coin is legal tender doesn't mean that it can be used to pay for goods and services. Only 'circulating' currency can be used for this purpose. So while you generously gave your staff 10 gold sovereigns (a £3780 bonus) you would still owe them £10 inc tax in circulating legal tender. I'm sure HMRC would love to have a little chat if you did try to attempt it. 😄

[CoinCupboard]

Do you pay weekly or monthly? 

I'll come and work for you next week and we can try it out. 

[Urlcool]

24 minutes ago, Kitalon said:

Lovely hypothetical question but just because a coin is legal tender doesn't mean that it can be used to pay for goods and services. Only 'circulating' currency can be used for this purpose. So while you generously gave your staff 10 gold sovereigns (a £3780 bonus) you would still owe them £10 inc tax in circulating legal tender. I'm sure HMRC would love to have a little chat if you did try to attempt it. 😄

That the question,  including to law unlike old money sixpence etc, sovereigns were never take out of general circulation, the government stop poroducing them during war and replace the money with non gold coins/notes but they never officially withdrawn them.  

[StackToCollect]

8 hours ago, Urlcool said:

Hi everyone, 

Got a interesting hypothetical question. If Im right a full gold Sovereign has a UK currency value of £1.  This the reason for being tax free when coming to being sold.  

Now, if I was to pay one of my staff with a £10 note as part of their salary. That £10 would be subject to income tax, NI etc.  (not taking tax allowances into consideration).  

Now instead, if I was to pay the same member of staff with 10 full sovereigns that would in theory be the same as the £10 note for tax purposes as sovereigns have a vaule of £1. 

What do you think?

 

 

Well the national minimum wage is £10.42 per hour, so 10 sovereigns will get you less than an hour's work. As the cost to procure these sovereigns will be significantly more than that, I suspect your business would go bankrupt fairly quickly. Even if you wanted to only part pay in sovereigns, any tax "gains" would surely be significantly outweighed by the procurement cost of the sovereigns. And that's before we even get into the legality of it that others have already touched on. Fun question though!

[Gordy]

9 hours ago, PrivateStacker195 said:

Sign me up! 

ME TOO!!!!!!!!

[SeverinDigsSovereigns]

You'd be better off exchanging sovereigns for Coloumbian marching powder of the same weight!

[HonestMoneyGoldSilver]

2 hours ago, SeverinDigsSovereigns said:

You'd be better off exchanging sovereigns for Coloumbian marching powder of the same weight!

I must strongly disagree. It's Colombian*

[Urlcool]

8 hours ago, StackToCollect said:

Well the national minimum wage is £10.42 per hour, so 10 sovereigns will get you less than an hour's work. As the cost to procure these sovereigns will be significantly more than that, I suspect your business would go bankrupt fairly quickly. Even if you wanted to only part pay in sovereigns, any tax "gains" would surely be significantly outweighed by the procurement cost of the sovereigns. And that's before we even get into the legality of it that others have already touched on. Fun question though!

That true have pay 11 sovereigns.  The company would buy them at full price therefore be classed as a expense and be taken off the corporation tax of the company..   and then be pay to the member of staff via paye as £11. 

That's my theory, don't think hmrc would allow it but I love to have the argument lol.

[jason94151]

On 13/01/2024 at 11:42, Urlcool said:

That true have pay 11 sovereigns.  The company would buy them at full price therefore be classed as a expense and be taken off the corporation tax of the company..   and then be pay to the member of staff via paye as £11. 

That's my theory, don't think hmrc would allow it but I love to have the argument lol.

I'm not from the uk so I don't know the laws there but I recommend you get a tax expert on this. Maybe this is a loophole and that it might be legal until they patch this.

[Geovest]

May work better with a gold Britannia as it clearly says £100 on it 😀

[SeverinDigsSovereigns]

Now another question arises.

Apparently there are people collecting banknotes with funny serial numbers. Those could go for a lot on the collectibles market.

What if you bought, say, a £50 note with serial number AA01 123456 for £1500, and reward it to your employee and declare to HMRC as £50?

I think it's perfectly valid you may have accidently come across such bank note and unknowingly paid it to your workers, who later realised he could profit on the serial number. It's also possible that you deliberately used collectible bank notes to trick the tax authorities.

And extending that hypothesis, you could reward employee with a sovereign with £400 declared value, which is about the market rate "to the best of your knowledge" but a 1917 London, which then could be flipped for £20,000.

My guess is whether your intention was to pay your workers a bonus in ways alternative to a bank transfer, or to make a covert payment of a large sum. In this case, it might be down to whether you have told the recipient that they could later sell the note/sovereign. It could also be whether you have made recent purchases of collectible items (which then implies the intention of using them for payment)

Any legal experts?

[Geovest]

You would have an accounting problem anyway. If you bought a sovereign for £400 or £20,000 and gave it to an employee at a lower value you would somehow have to account for the shortfall in value. 

[Lancashire1]

If I had a sovereign worth 20 grand why would I give it to Dave, the thick **** who works for me when his wages are only £400? If I owed him 20G in wages I'd be better paying him that as it would be a business expense.

I don't get it?

Edited January 20 by Lancashire1