UK Investors

Buying Physical Gold & Silver Tax Free

With No Capital Gains Tax Obligations

By IPM Group, August 2016 

 

Disclaimer  : We are not tax advisors and we would always recommend you seek out independent tax advice.

Never has it been more important to diversify your assets into physical precious metals, we have written many pieces on why some of the world’s most successful money and fund managers consider precious metals as an essential allocation at this time. Rather than go over the many justifications again (there is a wealth of information on this site),  we have written this article with the aim of showing the best means of executing such a trade with zero tax obligations under present UK laws.

Within this article we will clarify and hopefully demonstrate the supreme suitability of physical precious metals within your asset portfolio and their advantages over paper instruments.

We will help destroy any myths or false claims regarding tax commitments to the HMRC (HM Revenue & Customs) including capital gains tax obligations. Liquidity of physical metals (the ease of selling and buying), costs of storage and how best to hold your metal investment.

We will also cover the complete unsuitability, risk and tax liabilities of paper gold investment instruments to UK investors such as the GLD or other ETF’s (Exchange Traded Fund’s), or for that matter any other form of paper gold investment.

So what are the primary concerns of a UK based investor when considering purchasing gold and / or silver?

1. What are the tax obligations, if any?
2. How and where do I store the metals and what is the cost ?
3. Is it easy to sell my holdings at any time, without paying large bid / offer premiums ?
4. Why invest in physical assets and avoid paper precious metals at all costs ?

5. Indigo Precious Metals, major product cost and logistic advantages we offer our clients.

 

1. What are the tax obligations, if any ?

Under present UK tax laws purchasing physical gold is tax free (zero VAT), but only certain products have been approved as Capital Gains Tax (CGT ) free.

You save up to 28% tax on your profits from selling. You can make unlimited tax free profits on investments of any size and value on these British legal currency/tender coins or as we most often refer to them as ‘coins of the realm’.

As British Gold & Silver coins, they are given a sterling denomination and therefore are not chargeable for CGT purposes. This can be found under the HMRC manuals for more detail: currently listed as CG76881 - CG76881 - Chattels: coins and bank notes

 

 

What is Capital Gains Tax (CGT)? Capital Gains Tax is a personal tax on the profit when you sell an asset. You are taxed on the gain you make not on the total monies received.

So for example: If you purchased an amount of silver & gold Britannia’s for £50,000 and you sold the coins for £150,000 within the next few years. The gain made is £150,000 minus £50,000 = £100,000.

Therefore the appreciation of £100,000 would normally be subject to CGT of up to 28% (low band is 18% and up to 28% for the higher tax income bracket), but because they are the ‘coins of the realm’ there is no tax to pay in the UK.

VAT on Silver purchases. When purchasing Silver in the UK, VAT at the present rate of 20% is currently payable, however by purchasing silver and having it stored in a Freeport (bonded vault) then there is no VAT to pay whatsoever.

We at Indigo Precious Metals offer our clients their own individual, segregated, allocated vault holdings with Brinks vaulting in Freeport Singapore, not only giving you a tax free vehicle, segregated holdings, solely in your name, insured to the full value by Lloyds of London and access to full liquidity (ability to sell at any time), but also full vaulted reports from our vaulting agent every month with full audits in one of the worlds premier A class vaulting houses. To read more on what we are offering read here.

 

2. How do I store the metals and what is the cost ?

Storing your private wealth allocation is all important, we of course very much support and encourage the investor who wishes to collect personally or take delivery via insured shipment of their precious metal investments. This method works perfectly well for smaller allocations and certainly contributes to a regular saving scheme.

However the difficulty arises when one wishes to make larger investment diversification plans. 

Our solution is to offer our clients the opportunity to open their own private vaulted segregated box within a Freeport in one of the most secure vaulting facilities on the planet, audited and fully insured by Lloyds of London at incredibly low storage charges. 

The trend of private gold and silver moving to the East has allowed investment safe-havens such as Singapore, to overshadow Switzerland's traditional role of being the go to gold vault option of investment classes. To fully appreciate the Jurisdictional Safety of Singapore then read here.

 Singapore has many accolades to its name and brand, several of which are below…

 Singapore is ranked 1st in Asia for having the least corruption in its economy.

The country has a unitary parliamentary system. There is a special agency called CPIB ( Corrupt Practices Investigation Bureau ) in Singapore to investigate and to take legal actions against corruption. The powerful judicial system in Singapore is globally known for its legitimacy and impartiality in law.

In terms of economic performance, Singapore is ranked No. 1 worldwide as the city with the best investment potential after coming in second for 16 consecutive years. Singapore is one of the world leaders in foreign trade and investment.

Le Freeport Singapore is heralding a new era in wealth protection and creation with one of the world's most secure facilities and only completed in 2010, offering a highly confidential and attractive international free trade zone that makes for the ideal storage premises for precious metals.

To open your own segregated allocated vault in your own family name, held with a 3rd party storage vaulting house Brinks Security is an extremely quick and efficient process, annual costs are in the order of 0.3% per annum when storing Gold.

 

Example:

£250,000 holding of gold = £750 a year annual storage cost (0.3%).

£250,000 holding of silver = £1,375 a year annual storage cost (0.55%).

Holding of paper GLD ETF, as you can see below its actually more cost effective to hold physical in a vault under your own name than to hold a paper representation.

GLD : £250,000 holding of gold = £1,000 a year annual storage cost (0.4%).

 

3. Is it easy to sell my holdings at any time, without paying large bid / offer premiums ?

Gold is an enormous market, trading on a daily volume estimated at over 130 Billion US$.

Hence precious metals are extremely liquid as they are considered the true monetary asset, Gold / precious metals hold no 3rd party liability (unlike any other monetary asset) and are considered the only true safe collateral in times of crisis.

The spreads (the difference between the buying and selling price) at the time of this article are commonly 5% on gold Britannia’s and 6% on gold sovereign’s.

Indigo Precious Metals has instigated live buy-back pricing that is linked to the ever changing price of metals within world markets. We as a company will only be offering these product buy-backs to customers that hold their metals within the vaulting system in Le Freeport Singapore or in the London Vaults.

The purpose of this policy is to demonstrate that we can provide relevant paper trails directly back to the refineries, where we initially purchased the metals as distributors and had delivered directly into our company vaults or in fact our client vaults.

You can in effect sell at any time during the week.  Premiums are tightening all the time due to supply demand constraint’s / shortages in ready supply.

 

4. Why should I avoid paper gold & silver at all costs ?

Apart from the obvious tax advantage physical has over paper representations sold by banks and financial institutions is the fact you are actually liable to C G T on paper holdings !

As we explained in point 1. holding physical coins is tax free.

We have written a thorough investigation into physical versus paper read herebut we raise the point….

Gold’s appeal in the first place (and its stand alone qualities over and above other asset classes) is the fact that it has no 3rd party liability and is recognised as a top tier monetary asset (see central bank accumulation since 2010).

Why would you then buy paper gold and  attach and also layer it with multiple  3rd party liabilities to the very asset you are buying, which dilutes its purpose as the ultimate crisis insurance diversification ?

The very logic of trading in the first place is negated by buying paper gold, when you actually consider why the trade was initiated in the first place.

To summarise......

Physical Gold

Gold Paper ETFs

Control over your wealth  

No real control 

Full ownership 

You never own any gold 

Personal security and peace of mind 

Trust in a third party is required 

Secure investment 

Speculative investment 

Unique element in your portfolio 

Similar to any other share or fund 

Low risk 

Higher risk 

Crisis insurance 

Open to same risks as all investments 

Timeless asset 

Not an asset 

Keep for generations 

Too risky to keep for generations 

 

5. Indigo Precious Metals, major product cost and logistic advantages we offer our clients.

The team at IPM Group (indigopreciousmetals.comhas many years experience in the Financial industry working directly in the investment and trading sectors, across numerous asset classes, acting both as principle and on behalf of customers.

We now deal in precious metals on a daily basis, buying, selling, transporting, storing and insuring them.

We offer a simple asset diversification opportunity, both in the form of direct delivery or secure storage at fully allocated vaults operated by one of World’s safest storage facilities in Singapore Freeport, or London vaults within the mint’s premises of Baird & Co.

We pride ourselves on our relationships with our customer base, hence in our business model simplicity and transparency are paramount. 

In addition to our client driven service, our pricing structure is designed to be consistently more attractive than our competitors.

Our company has offices in Singapore and Malaysia in the heart of Asia, situated in a region that has long recognized the importance of Precious Metals as Investment Products, and provides a depth of world class expertise and security for our clients 

 IPM Group is a Singaporean company, located in the dynamic hub of precious metals physical trading and storage for South East Asia and the world.

Of course we offer a very wide range of products that our clients can effectively purchase tax free by holding within one of our vaulting facilities in either Singapore Freeport or vaulting in London.

Contact us now to discuss what options are available to you with physical precious metals in Singapore & London. Email us at info@indigopreciousmetals.com

 

We also offer a range of the platinum group metals, which are all experiencing very dynamic supply / demand stresses.

Global demand for rhodium is poised to exceed output by the most in three decades as carmakers and chemical companies snap up supplies near the lowest prices in twelve years. We have written an investment examination on Rhodium here..

 

As mentioned at the start of the article, we are not tax advisors and we would always recommend you seek out independent tax advice. This guide is only meant to be used as an aid and an introduction to physical precious metals investment and avoidance of Capital Gains Tax.

Disclaimer : The information contained in this website should be used as general information only. It does not take into account the particular circumstances, investment objectives and needs for investment of any investor, or purport to be comprehensive or constitute investment advice and should not be relied upon as such. You should consult a financial adviser to help you form your own opinion of the information, and on whether the information is suitable for your individual needs and aims as an investor. You should consult appropriate professional advisers on any legal, taxation and accounting implications before making an investment.

 

Protect your wealth; invest in physical gold, silver or other precious metals at best prices from Indigo Precious Metals. Physical delivery in Singapore, Malaysia, UK, Europe or worldwide.  

Consider the safest option of segregated, allocated vault storage at Freeport Singapore with IPM Group.