Capital Gains Tax Changes: What the 2024 Budget Means for Precious Metal Investors

2024 Capital Gains Tax Changes: What the Budget Means for Precious Metal Investors

The 2024 Autumn Budget has brought notable adjustments to Capital Gains Tax (CGT) rates, impacting the profitability of various investments, including precious metals. With increased rates affecting individuals selling investments, understanding these changes can help investors make strategic decisions.

Here’s what’s changing, how it affects your investments, and why CGT-exempt precious metals are a smart choice for savvy investors.

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What is Capital Gains Tax?

CGT is a tax generally applied to any money you make when selling assets that have increased in value from the time you bought or otherwise received them. For example, if you buy an investment for ￡5,000 and sell it for ￡10,000, you would be making a profit, or capital gain of ￡5,000.

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What’s Changing in CGT Rates?

The recent Budget has introduced new CGT rates, particularly impacting those in higher tax brackets:

• For disposals made on or after 30 October 2024, the lower rate of capital gains tax will rise from 10% to 18%, and the higher rate from 20% to 24%.
• From 6 April 2025, the rates of capital gains tax that apply to carried interest (the share of the profits which arise to managers of an investment fund where the investments in a fund perform above a certain level) will rise from 10% and 28% to 32% and then to 36% in April 2026.
• Capital gains tax rates for business asset disposal relief and investors’ relief will rise to 14% from 6 April 2025 and match the main lower rate of 18% from 6 April 2026.

This increase will especially impact those selling investments with gains above their annual allowance, as higher tax rates reduce profit margins. Investors are now prompted to evaluate their assets and consider tax-efficient alternatives, particularly in the realm of precious metals.

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Read 'UK Autumn Budget 2024: Key Takeaways and Impact for Investors'

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Capital Gains Tax on Precious Metals

CGT applies differently to various forms of precious metals, making it essential to understand which investments are taxable.

If you’re an investor in the UK, most gold and silver coins produced in the UK by the?Royal Mint?are legal UK tender and exempt from Capital Gains Tax. This means that you can make an unlimited tax-free profit on investments of any size and value on all legal UK currency coins.

This is?not the case with?gold and silver bars. Gold and silver bars have no denomination value, and even if purchased in the UK, are not representative of legal tender. This makes bullion bars subject to CGT, something which investors need to be aware of when declaring any payable Capital Gains Tax under HMRC’s Self Assessment.

With increased CGT rates, switching to UK legal tender coins is an effective way to preserve your wealth and minimize tax liabilities on future gains.

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Read 'What Bullion Is Capital Gains Tax Exempt?'

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Selling Bars to Buy CGT-Exempt Coins: A Strategic Shift

With these tax changes, many investors are rethinking their approach to precious metals, opting to sell bars and reinvest in CGT-exempt UK legal tender coins like Sovereigns and Britannias.

While bars were once the go-to for many, coins now offer a more tax-effective option for those looking to reduce exposure to CGT. This adjustment allows you to continue holding valuable precious metals while gaining the added benefit of CGT exemption on future sales.

A Changing Strategy: It’s a prime example of why regular portfolio reviews are essential. Just because bars were the best choice in the past doesn’t mean they are today. With CGT exemptions on UK coins, investors are finding that a shift to coins better aligns with today’s tax landscape and their long-term financial goals.

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Investment Strategy: Why Choose CGT-Exempt Precious Metals?

Increasing CGT rates make tax-efficient assets like CGT-exempt coins even more attractive. Here’s why they’re an excellent choice:

1. Tax Efficiency: Gains on CGT-exempt coins stay in your pocket rather than being taxed.
2. Portfolio Flexibility: Precious metals balance risk, especially in uncertain markets, offering a stable store of value.
3. Long-Term Value: Gold and silver maintain their worth during market volatility, making them ideal for wealth preservation.

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Read 'Enhance Your Portfolio Resilience with Gold and Silver Investments'

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Here to help

We are not licenced or regulated advisors and cannot advise, but we have a lot of experience. We can provide guidance to familiarise you with the choices available. Not every financial advisor or accountant fully understands precious metal investing. Once you’re equipped with the basics, they should be able to help you shape your plan.

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Contact us