For UK investors, certain gold coins offer a significant tax advantage: complete exemption from Capital Gains Tax (CGT). Understanding which coins qualify and how to structure holdings can meaningfully impact long-term returns.
The Legal Basis for CGT Exemption
Under Section 269 of the Taxation of Chargeable Gains Act 1992, British legal tender coins are exempt from CGT. This exemption applies regardless of the gain realised, making qualifying coins particularly attractive for larger investors.
The exemption exists because these coins are classified as "currency" rather than investments under UK law. Any gain from their sale is treated as a currency transaction rather than a capital gain.
Qualifying Coins
The following gold coins are UK legal tender and therefore CGT-exempt:
- Gold Britannias: Available in 1oz, 1/2oz, 1/4oz, and 1/10oz denominations
- Gold Sovereigns: Including full, half, quarter, and double sovereigns
- Queen's Beasts Series: Produced by the Royal Mint from 2016-2021
- Lunar Series: Royal Mint's annual lunar zodiac coins
- Tudor Beasts: The current Royal Mint series
It's crucial to note that foreign gold coins—including popular options like American Eagles, Krugerrands, and Canadian Maple Leafs—do NOT qualify for CGT exemption in the UK.
Practical Example
Consider an investor who purchased £100,000 of gold:
Scenario A: Gold Bars
Purchase: £100,000 | Sale: £150,000 | Gain: £50,000
CGT (after annual allowance): ~£9,520
Net Proceeds: £140,480
Scenario B: Gold Britannias
Purchase: £100,000 | Sale: £150,000 | Gain: £50,000
CGT: £0
Net Proceeds: £150,000
The tax savings of £9,520 in this example could fund additional gold purchases or other investments.
Premium Considerations
CGT-exempt coins typically carry a higher premium over spot gold compared to bars. This premium reflects:
- Manufacturing costs for the intricate designs
- Smaller production runs compared to standard bars
- The inherent tax benefit, which is priced into the market
For shorter holding periods, the premium may erode potential gains. However, for holdings expected to exceed 3-5 years with significant appreciation, the CGT exemption typically outweighs the initial premium.
Reporting Requirements
While gains on CGT-exempt coins don't need to be reported for CGT purposes, investors should maintain records of:
- Purchase dates and prices
- Sale dates and proceeds
- Coin specifications and quantities
This documentation protects against any future HMRC inquiries and provides a clear audit trail.
Estate Planning Considerations
CGT-exempt coins remain subject to Inheritance Tax (IHT). However, their CGT-free status can be valuable in estate planning:
- Beneficiaries inherit at market value with no CGT on deemed disposal
- Future gains by beneficiaries remain CGT-exempt
- Lifetime gifts can be made without triggering CGT
How Marcellus Can Help
Our advisors can help you structure a tax-efficient precious metals portfolio incorporating CGT-exempt coins. We offer:
- Access to full range of qualifying coins at competitive premiums
- Secure allocated storage in UK, Switzerland, or Singapore
- Documentation and reporting for your records
- Guidance on optimal holding structures
Note: This article provides general information and should not be considered tax advice. Please consult a qualified tax professional for advice specific to your circumstances.