The British Sovereign is one of the most widely traded gold coins in the World. Besides the intrinsic gold
value that these coins hold, their appeal stretches beyond their weight in gold due to exemption from
capital gains tax.
The Full Sovereign weighs 7.9g, with the Half Sovereign weighing 3.9g, and the much more recent
Quarter Sovereign weighing 1.9g. All Sovereigns are struck in .916 2/3 fineness, more commonly known
as 22ct, and have been Minted by either the Royal Mint in London, or a royally sanctioned Mint in
Australia, India, Canada or South America. Regardless of the country in which these coin have been
minted, they all carry the British Design, and therefore remain legal tender, with a nominal value of one
pound sterling. Needless to say the market value of these coins as an investment is significantly higher
than their £1 face value.
Capital Gains Tax Exemption
British coins minted in 1837 or later years have unique appeal to the knowledgeable investor- they are
exempt from Capital Gains Tax (CGT). Capital Gains Tax is a tax on the profit that one makes on disposal
of assets. This exemption is not just true for the British Sovereign minted in 1837 and later years, but
also include the larger one ounce Britannia's, and the five & two pound coins. The British Coins along
with all other 'investment' coins and bullion bars (as outlined by the European Commission) are tax-free.
The additional benefit to Buying the British coins outlined above over a bullion bar or foreign coin is that
they remain exempt from capital gains tax when selling on for a profit (or a capital gain). It is absolutely
apparent that these coins have, and always will be, considered a valuable bullion asset. However, it is
their Capital Gains Tax exemption that has facilitated the demand for British gold coins in recent years.
About Capital Gains Tax
In the UK, Capital Gains Tax is applicable for all profits over £10,100.00. It is important to clarify that
capital gains tax is only applicable to profits made when selling, and not the total amount of the sale. For
many individual investors and coin collectors this CGT annual limit is not likely to be reached on profits
alone. However, for the larger investors buying British coins is definitely worth some thought. It is for
this exemption that British Sovereigns, along with many other British Coins, are seen as the most
advantageous ways of purchasing large quantities of investment gold.
Extract from HMRC
CG78307 - Foreign currency: coins: legal tender
Coins are to be regarded as currency only if they are legal tender at the time of their acquisition or
disposal. Coins which are currency but not sterling, for example Krugerrands, are chargeable assets.