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
PROMOTED VIDEO
Arts and Entertainment
Convicted art fraudster John Myatt
art

Life and Style
fashion

News
The Magna Carta
archaeologyContemporary account of historic signing discovered
News
Jeremy Paxman has admitted he is a 'one-nation Tory' and complained that Newsnight is made by idealistic '13-year-olds' who foolishly think they can 'change the world'.
peopleFormer Newsnight presenter is being touted for a brand new role
News
The two-year-old said she cut off her fringe because it was getting in her eyes
news

Video: It is the type of thing no parent wants to hear

Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
film
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Sales Executives

£19000 - £24000 per annum: Recruitment Genius: Due to our clients continuing s...

Argyll Scott International: Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game