Is Gold Exempt from Inheritance Tax?

Recent?reports?suggest that Prime Minister Rishi Sunak is considering a cut in inheritance tax (IHT) rates ahead of the next general election.

Currently, the standard IHT rate is 40%, payable on parts of the estate that exceed a ￡325,000 threshold.

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Who pays Inheritance Tax?

The number of people who actually pay inheritance tax is very small, but every year more people find themselves paying it. According to the?latest government statistics, only 3.76% of deaths in the tax year 2019 to 2020 resulted in an IHT charge – a total of 23,000 deaths. Inheritance tax receipts received by HMRC during the financial year 2021 to 2022 were ￡6.1 billion.

Is Gold Exempt from Inheritance Tax?

The short answer to this question is no.

There is a misconception that IHT only applies to property, and while a house may make up a significant portion of the total tax liability, almost every asset within an estate is liable.

How to Reduce Your Inheritance Tax Bill?

1. You can gift ￡3,000 each year. This is called the ‘annual exemption’ and if you didn’t use your allowance last tax year you can also carry this allowance forward and use it in this tax year. Each person gets an allowance, so as a couple looking to gift to children/grandchildren you would have ￡6,000 each year.
2. You are allowed to make gifts of up to ￡250?to as many people as you like if you haven’t made any larger gift to that person (for example, the ￡3,000 mentioned above).
3. Each year the rules allow you to gift a lump sum to someone getting married or starting a civil partnership. For children you can gift ￡5,000, for grandchildren and great-grandchildren the allowance is ￡2,500 and then ￡1,000 to anyone else.
4. You can also gift an unlimited amount and as long as you live for more than seven years afterwards, your heirs will not have to pay any IHT.

If you’re giving away money or assets to reduce Inheritance Tax, it’s very important you make a record of: What you gave, Who you gave it to, When you gave it and How much it was worth at the time. Bear in mind that giving away assets whilst trying to mitigate against IHT could crystallise a Capital Gains Tax liability, so it is a good idea to get proper advice.

The Impact of Capital Gains Tax

The annual tax-free allowance for Capital Gains in the UK has now been reduced from ￡12,300 to ￡6,000. It will reduce again in April 2024 to ￡3,000.

This means that without careful planning, any individual selling an asset for a gain will likely pay more in CGT than prior to April 2023.

Don’t worry, we have a solution for you!

If you’re an investor in the UK, gold and silver ‘Legal Tender’ coins are exempt from CGT. This means you can make an unlimited tax-free profit on investments of any size and value on any legal UK currency coins.

Examples of CGT-free UK coins include?Royal Mint Britannia Coins,?Royal Mint Sovereign Coins,?Royal Mint Queens Beast Coins?and?Royal Mint Tudor Beast Coins.

So if you gift (￡3,000 per year per parent) UK legal tender coins to your child they will not pay inheritance tax or capital gains tax on them.

Here To Help

We recommend that all readers should do their own research before making any purchases, but if you’d like to speak to a member of the team for some additional guidance, we’d be delighted to hear from you at 01769 618 618, or you can email us at [email protected], and we’ll get back to you asap.