Gold coins glitter after VAT ruling

GOLD, the great 1970s investment medium that flopped in the 1980s, is still waiting for a revival. The price was pegged at $35 an ounce from 1935 until 1972 and, once released, went sky-high. It peaked at $850 an ounce in January 1980 and since then has gone nowhere fast.

In the 1970s it was quite common for private investors to buy a few gold coins to add to their portfolios, but even that was stamped on by authority. When exchange controls were lifted in 1979, VAT was charged on gold bullion bars, although not on coins. Fraudsters purchased gold coins, melted them, turned them into ingots and claimed back the VAT when they were sold.

In April 1982 VAT was imposed on coins too. Private investors could not reclaim the VAT and stopped buying.

Only antique coins worth much more than their gold content escaped. Now, thanks to an EU directive, private investors can again buy modern gold coins for a fraction above their gold content, and still escape the 17.5 per cent VAT.

Provided certain rules are observed, the directive allows dealers to sell any second-hand item worth less than £500 without collecting VAT on the retail price. If the item is made from precious metal, it has to be sold above its metal content's market value. Gold coins, including British sovereigns, Australian Nuggets, Canadian Maple Leafs and South African Krugerrands are in this category, provided they are not fresh from the mint nor have just been brought in from outside the EU.

Although the directive was not specifically implemented to cover bullion coins, Customs and Excise accepts that the legislation embraces such material.

Not all dealers operate the scheme, so check before you buy. Dealers also still pay tax on the difference between the cost of a coin and the price it fetches. Nigel Tooley, in charge of Spink's bullion department, says the spread between bid and offer price of bullion coins has not altered significantly.

However, gold coins are a much cheaper way of buying gold than gold chains and charms, which carry a big mark-up.

There is 0.2354 troy oz of gold in a sovereign, which means its bullion value last week was about £57.50. In bulk dealers would buy at £57 and sell at £59.

However, its retail price depends on the quantity purchased. For a small order, the retail price on Friday was £63 each. For larger orders of, say, 50 or more, the price falls to £60 each.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border