CGT: investors rush into gold coins to beat tax rise

Britain’s bullion dealers are struggling to source enough gold sovereign and Britannia coins to keep up with surging demand ahead of an expected rise in capital gains tax (CGT) in the emergency budget.

 

Published: 11:47AM BST 10 Jun 2010

Comment on this

Sovereigns are exempt from CGT

Dealers are reporting a backlog of orders for bullion coins recognised as UK legal tender, which are exempt from CGT.

Anthony Baird, managing director of gold dealer Baird & Co, said the company could not deliver any Britannia coins until August because of lack of supply.

 

Related Articles

• CGT: investors seek out wine

• Gold price hits new record as it breaks through $1,250

• Public is against tax rise, warns Tory peer

• Readers join fight against CGT rise

• Cameron backs down on CGT

• Silver ‘will outperform gold’

“We buy directly from the public,” said Linda Warner of bullion merchant ATS Bullion. “In the last couple of weeks, supply has been drying up because people hold on to what they’ve got in a situation like this.”

The supply situation is worse from overseas sources, with European sales onto the market of coins and other forms of investment bullion particularly slack.

Gold is in high demand in Europe as investors there seek out the metal as a safe store of value amid fears over sovereign debt problems in the eurozone, meaning fewer coins are coming back to market.

“We have a backlog of orders at the moment for sovereigns and Krugerrands,” said Caroline Jewell of Chard, a Blackpool-based coin and bullion dealer.

“We buy quite a lot of our gold from Europe, and [among] the Europeans at the moment demand is much higher than it is in the UK. European dealers don’t have anything to sell to us at all.”

In Britain, dealers believe that tax issues are of higher priority to investors than haven demand.

The Government is expected to raise CGT, levied on items such as the sale of shares, from its current flat rate of 18pc to a level closer to the 40pc higher rate of income tax as part of a plan to tackle Britain’s hefty deficit.

Dealers say the plans have prompted a significant number of British investors to buy the coins as a store of wealth.

“We have a lot of people materialising capital gains on existing bullion and moving into gold coins that wouldn’t be subject to capital gains, such as sovereigns and Britannias,” said Mr Baird.

Gold sovereigns, which have been in production since the 15th century, historically had a nominal value of one pound. Their current price fluctuates along with the spot gold price and availability.

The Royal Mint lists its 22-carat 2010 gold bullion sovereign, which weighs 7.99 grams, for sale at £230 pounds, and its limited edition 2010 sovereign proof coin at £340.

Gold prices hit record highs on Tuesday in dollar terms above $1,250 an ounce, and have also reached new peaks in euros, sterling and Swiss francs as turmoil on the financial markets prompted buying of bullion as a haven from risk.

Demand for gold coins has been strong internationally, with rising sales reported in the United States, Russia and Austria

 The silver Britannia £2 coin was introduced in 1997. These are the largest and purest legal tender silver coins being issued by Great Britain—made from an alloy of 95.8% silver with the rest copper. The total weight is 32.45 gm. – and each Britannia coin contains precisely 1 troy ounce of pure silver.

Click here to order yours for $37.00 shipping and insurance included in the USA.