Gold Coins & Inheritance Tax

John-K_3

dividendhero wrote: »

Out of interest - how does taxman even know of the existence of things like gold coins??

Ah, my mistake. I said that the first person hinting at tax evasion would be along shortly, but missed that one person had already jumped in with it.

John-K_3

Chromebar wrote: »

Correct, and there are TWO market values for coins. For paper notes I guess there is some miniscule commodity value in the paper as scrap but for coins there is a tangible commodity value in the metal .
Thus one can chose how to record the coins value in ones accounts and tax filings.

For god’s sake, this is painful.

No, there are not two market values. If there were you would be an,e to buy these coins for £100.you know that you cannot, so why are you pretending otherwise.

Market value is the value that something trades at. You are confusing face value with market value.

Did you really sign up just to make yourself look stupid?

Chromebar

squeeks wrote: »

If you want to pay your inheritance tax bill in gold coins using the face value of the coins, go ahead. But the tax due will be calculated on the actual value of the coins which are part of the estate, subject to the normal rules.

Employers have tried paying employees in gold coins claiming the face value of the coins as the amount paid for tax purposes. The tax man will have his pound of flesh and it doesn't generally work out in your favour when you try to be a smart ....

Being paid in legal tender gold coins is not illegal and to enjoy the tax benefits one must ensure that one complies with the HMRC rules regarding payment in kind. If one does then there are no tax implications as stated above.

Aegis

Chromebar wrote: »

Correct, and there are TWO market values for coins. For paper notes I guess there is some miniscule commodity value in the paper as scrap but for coins there is a tangible commodity value in the metal .
Thus one can chose how to record the coins value in ones accounts and tax filings.

This is a) nonsense and b) tax evasion. Anyone following your "advice" is committing a crime.

bowlhead99

Chromebar wrote: »

Being paid in legal tender gold coins is not illegal and to enjoy the tax benefits one must ensure that one complies with the HMRC rules regarding payment in kind. If one does then there are no tax implications as stated above.

So basically what you are suggesting is my employer could pay me my 2018/19 salary as, say, 7 Britannias a month so over the year I'd get 84 coins which cost my employer £81k so following the 'benefit in kind' rules as you suggest I would have to pay my income tax on the benefit in kind of £81k.

But when we look at the national insurance situation I don't pay NI on a benefit in kind, only on cash paid to me, and from a cash perspective the 84 coins are legal tender for £8400, which is below the primary threshold of £8424 hence no NI for me to pay; however, it's above the lower earnings limit of £6032 per year so I will get full credit towards my state pension.

Sounds good to me so I'll let our CFO know. Obviously I don't want a pay cut to £81k a year but I like the concept.

Maybe if you email MSE, Martin Lewis can put 'money saving tip - get paid in gold coins and use their low face value for HMRC calculations' as a feature of the week in the newsletter which goes out to ten million people.

Two likely effects would be an increase in demand for (and price of) bullion coins, and an increase in tax and NI rates so the government could keep generating the income it needs to run the country and still be able to pay for pensions and health service etc. So, best to keep such tips to yourself and your own employer to avoid 'killing the golden goose'.

GavB79

steampowered wrote: »

Please do not fall into the trap of assuming that these coins are actually worth the amount you are paying!

Read this thread which is self-explanatory: https://forums.moneysavingexpert.com/discussion/5557600

We are talking gold britannias here, not novelty commemorative coins as your linked thread implies. They are very much worth the amount paid (at the time of purchase at least), that's the whole point.

Theta101

Didn't the banks try and pay their Bonus in Gold coins back in Maggies day?

I'm sure the government plugged that loophole.

xylophone

See


https://www.taxationweb.co.uk/forum/gold-sovereigns-iht-t50998.html

160 Market value.
Except as otherwise provided by this Act, the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time.





https://www.accountancylive.com/hmrc-clampdown-tax-avoidance-using-gold-bullion

Aegis

Just adding to this and expanding on my earlier point...

The idea that something can have two wildly different market values is nonsense because of arbitrage. A market value is the point at which desired sell values and purchase prices converge at a point or range. Where this occurs, you get a certain volume of transactions within a certain band around the market value, which then moves as the buy and sell orders are filled. If gold coins had two different market values, this would imply that there were some sellers of said coins willing to take only £100 (say) per coin, while some buyers would be willing to pay around £1,000 for the exact same asset.

If this was to occur, I would be participating as follows:

• Buy as many coins as possible at £100 per coin.
• Sell as many coins as possible at £1,000 per coin.
• Repeat until I have all the money or the market responds by generating a more sensible value for the asset.

From HMRC's perspective, trading assets like this at their notional value between connected parties would just be made up of two distinct parts:

• The agreed purchase price, resulting in an exchange of value and a disposal / acquisition for capital gains or inheritance tax purposes (or, for that matter, income tax in the foolish examples given above of employers paying employees with gold coins)
• A further transfer of value from the disposer to the acquirer of the difference between the actual market value (i.e. what people actually buy and sell the asset for when not connected) and the discounted value.

There is zero legal merit in trying to argue that something "has two market values" (this is nonsensical, as shown above) or that assets can be trades at par value rather than market value if the owner wants to (the law clearly states that it is market value which matters, not par value).


Hence my conclusion that this is just tax evasion, plain and simple.

Brynsam

Couldn't be bothered to plough through the whole thread, so in case anyone else hasn't yet given the reference; valuation of coins or banknotes must be prepared in accordance with IHT section 160 of the inheritance tax act 1984.