Petition - End VAT on Silver Bullion

Aegis

rapidly_balding wrote: »

How churlish.... There are thousands of Silver metal buyers who are upset at the VAT situation. And yes, if TSHTF then your paper will be as worthless as promises that your Gold or Silver paper contract is worth any more than spit.

Thousands of silver buyers on one hand, tens of millions of tax payers on the other, paying VAT on almost every transaction they make. Why should the relative few silver buyers get tax exemption just because they want to physically hold an asset rather than simply trading in it? What's the rationale behind this suggestion when so many other goods and services that are more important still have VAT charged?

I'm more than comfortable trading electronic stocks. With sufficient diversification, I'll be more than fine.

You need to learn your history, this comfortable western world you know may change quite beyond recognition.

I know enough history, thanks. I'm aware that we've just had one of the biggest financial crises since the modern financial system was put into place, and the stuff I've bought into is still doing just fine.

I honestly don't see why so many people are constantly going on about the end of the world as if it's in any way likely.

DiggerUK

If the government gets support for no tax ISA's, which have not always existed, why is there this opposition to tax free investment in silver.

What is this opposition to investments in precious metals based on.

Is it because the usual suspects earn no commission or fees, or is there a valid economic argument against such an investment.

Aegis

DiggerUK wrote: »

If the government gets support for no tax ISA's, which have not always existed, why is there this opposition to tax free investment in silver.

You can invest tax-free in silver and other precious metals. You can do it through CFDs or spreadbetting, or via ETCs held in a SIPP or an ISA. You just can't do it with the physical. That's why I said that the VAT was basically a premium paid to hold the physical metal in your hand rather than buying electronically.

What is this opposition to investments in precious metals based on.

Since it doesn't exist, nothing.

Is it because the usual suspects earn no commission or fees, or is there a valid economic argument against such an investment.

What "usual suspect" would that be? I don't earn any commission from any investments, and I would charge the same fee for recommending silver as I would for recommending gold, assuming I was in the position where I was authorised to directly advise. I'm completely unconcerned about the level of commission from a product.

The reason I oppose it is simple: I don't believe that the tax system should rearrange itself so that a very small number of people get better investment terms at the expense of everyone else. I don't think it's fair.

DiggerUK

Aegis,
If you have no opposition to investing in tax free paper, fine. There is still the liability for CGT or even income tax to consider.

VAT is charged on UK legal tender silver coins, even though they are CGT free when sold, that is not right.

Your denial of a prejudice against precious metals, will not be convincing anyone, especially as you are in favour of the tax advantages associated with the commission and fee generating products pushed by the usual suspects.

ses6jwg

Why are some people obsessed with gold/ silver etc?

jdemaistre

You can largely avoid the VAT on physical if you buy second-hand bullion; in those situations, it's the trader's margin rather than the whole price that is subject to VAT. Ask one of the main traders in the UK for more details. Only problem is that there is generally a very high demand for second-hand.

Aegis

DiggerUK wrote: »

Aegis,
If you have no opposition to investing in tax free paper, fine. There is still the liability for CGT or even income tax to consider.

Just like almost every other investment. The ONLY difference is that Gold has a historic exemption from VAT which I actually feel should be rectified. I don't see any reason why someone investing in physical silver and gold should be any different to someone "investing" in physical grain (VAT) or property (Stamp Duty).

Of course, you can do away with the CGT by investing inside ISAs and pension wrappers, like I already mentioned. just like any other type of investment.

VAT is charged on UK legal tender silver coins, even though they are CGT free when sold, that is not right.

It's "not right" because it inconveniences you. If your preferred investment was tax free while most other peoples' investments were taxed on both the income AND the capital gains, that would be wrong. As it happens you already get CGT exemption, you don't need VAT exemption too.

Your denial of a prejudice against precious metals, will not be convincing anyone, especially as you are in favour of the tax advantages associated with the commission and fee generating products pushed by the usual suspects.

Quit your bleating and actually demonstrate a bias for reasons other than safety, otherwise just go away. Your accusations are getting tiresome, and it's really only for the benefit of others that I continue bothering to reply to your posts. You offer quite terrible advice at times, and it's down to those of us who actually have an interest in proper asset allocation and financial planning to correct you pretty much every day.

You clearly have a bias against IFAs, and therefore can't distinguish between any reasons that they might disagree with you.

Little hint here, though: it's NOT just IFAs who disagree with you on your investment "advice" around here, it's damn near everyone with any experience with investments.

gozomark

Would it even be allowed under EU law to zero VAT silver ?

JasonLVC

Silver can be zero rated already under the Black Box agreement with the London Bullion Market Association. Provided the silver doesn't leave the UK, it can be traded and is not subject to VAT. Only when the silver is 'removed' from the Black Box does it become liable to VAT at the standard rate - this is becuase silver is a known fraud risk (ie, like missing trader fraud which involve the fake movement of high value goods - usually mobile phones between EU borders, it is less prevelant with gold due to higher bullion costs). There are special rules for mobile phone transactions as a result and so it is with silver. Basically, too many fraudsters have led to this disparity.

Notice 700/57 on the HMRC website details the Black Box scheme.

Equally, gold coins are also standard rated (unless they are colllctors currency) or unless they are phsycally outside of the UK at time of purchase or are in the UK but being exported to a non-EU country. Investment gold is an exempt supply as it is seen as a financial service rather than the sale of a commodity due to the historical use of gold as currency. HMRC Notice 701/21A (on the HMRC website for more details) lists what are considered to be investment gold coins and what are not. if they are not on the list, they are generally standard rated unless they fall under another exemption or zero rating.

It is odd that there are more perks for gold than silver, but if that is to change, it needs to be done at a European level as VAT is a European tax governed by European law, the UK VAT Act 1994 can only replicate the EU Directives with very little room for manouvre without protests and penalties from the other EU member states.

Reaper

Thanks Jason, very informative.

With tax due to spiral after the next election, regardless of who wins, the chances of a petition to reduce taxes succeeding is zero. Furthermore if they made silver more attractive it would reduce investment by moving money away from the markets.

If the government had a free hand it would be much more likely the disparity would be addressed by putting VAT on gold too. Maybe the petition will be completely counter productive and put the idea in their heads!