People in the UK are rushing to purchase gold coins in an attempt to shield themselves from a potential increase in Capital Gains Tax (CGT). The Royal Mint has reported a notable surge in the number of individuals buying gold coins, with figures doubling compared to the previous year as people look to safeguard their wealth. The global price of gold has significantly risen over the past year, largely influenced by economic uncertainties related to the crisis in the Middle East and Russia’s invasion of Ukraine.
The increasing demand for gold coins has been fuelled by speculations that Chancellor Rachel Reeves might raise CGT on profits generated from selling assets like shares and property. With calls mounting on ministers to raise CGT from the current average of 20% to align with income tax rates of 40% or 45% for higher earners, owning shares and property may become less attractive. This potential change has led to a renewed interest in investing in gold coins, which are not subject to CGT on any increase in value, making them a more appealing option for investors.
As a result, the Royal Mint has observed a 118% increase in gold coin sales between July and September. Their research indicates that 44% of UK investors are considering investing in CGT-exempt bullion coins to grow their wealth and reduce their tax obligations. The Mint emphasised that more people are exploring the tax-efficient status of gold coins. While CGT applies to gold and silver sold as small bars, it does not affect bullion coins issued by the Mint. During the same period, the Royal Mint noted a substantial growth in revenue from silver and gold sales, increasing by 42% and 118% respectively compared to the previous year. Conversely, sales of bullion bars, which are subject to CGT, experienced an 11% decline.
Stuart O’Reilly from the Royal Mint highlighted the positive market sentiment towards gold, attributing it to factors like changing interest rates, economic uncertainty, and geopolitical risks. O’Reilly noted that investors are shifting towards tax-efficient investments, with a focus on CGT-exempt options like bullion coins. He pointed out the growing interest among investors in safeguarding their investment gains through tax-efficient means, particularly ahead of potential changes in tax policies such as the UK budget and the US election.
The trend towards tax-efficient investments, especially in gold coins, reflects a broader movement among investors to protect their wealth and maximise returns in a changing economic landscape. With ongoing discussions around potential tax reforms, the preference for CGT-exempt investments like bullion coins is likely to continue as investors seek to navigate evolving financial environments.