Capital Gains on bullion stored in vault?

[wildraid]

I am confused about calculation of Capital Gains for bullion (gold, silver, etc.) stored in overseas vaults. There are few companies offering this service to individuals.

The key points of such businesses are following:

1) It is allocated gold. Buyer owns part of 400Kg good delivery bar. Holdings are measured in grams, not in shares or units.

2) Bullion in different vaults is stored separately. Each vault is individually listed in trading board and has it's own price and market spread. Normally it is not possible to move bullion between vaults.

3) Gold stored in the single vault is definitely "pooled". It is not possible to distinguish gold purchased with different transactions.

4) It is possible to trade in all major currencies, not only in GBP.

5) There are small dealing and storage fees.

The questions are following:

1) Is such investment considered as "section 104 holding"?

2) Does "30 day rule" apply if investor sells gold in one vault and buys gold in another vault next day?

3) Is it ok to use HMRC Monthly Currency Rates to calculate GBP value of transactions in foreign currencies?

4) Is it possible to deduct trading fees from capital gains?
5) Is it possible to deduct storage fees from capital gains?



Thank you.

[bd6759]

1. No
2. No
3. Yes
4. Yes
5. No

[maths]

Check out:

http://www.taxationweb.co.uk/forum/post ... on#p128297

[wildraid]

Check out:

http://www.taxationweb.co.uk/forum/post ... on#p128297

Perfect, thanks! I was definitely searching on this forum, but I could not find this old topic somehow.

I'll add some quotes from HMRC Capital Gains Manual to help others looking for this information:
1) https://www.gov.uk/hmrc-internal-manual ... al/cg13370

Note that the share identification rules apply to all assets that usually dealt in without having to identify the individual asset. See CG51500.

2) https://www.gov.uk/hmrc-internal-manual ... al/cg51500

The issue does not just arise with shares but with any assets that are not distinguishable from each other or are dealt with as if they are. The share identification rules therefore also apply to such assets TCGA92/S104(1)(3)(ii). Se CG11820.

The rules also even if in practice the separate assets are identifiable, say by their numbers, TCGA92/S104(1).

3) https://www.gov.uk/hmrc-internal-manual ... al/cg11820

They also apply to other fungible assets. In practice, the rules will mainly be relevant to intangible assets such as shares and other financial instruments and foreign currency. When physical assets are disposed of the quality or condition of a particular item will often be significant. A good example of a physical asset to which the rules may apply is bullion metal. One bar of gold or silver bullion of “good delivery” standard is in practice the same as any other.

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So it is "section 104" holding after all. Surprisingly, my accountant never mentioned it. I've accidentally found it myself while checking capital gains rules for ETF's.

The only thing I am not sure about is this part:

If the 30 day rule does apply - would it apply if you sold the gold and then repurchased it in a different domicile to the UK like the USA or Switzerland through the same company like Bullion Vault?

Here is the Live board of BullionVault:
https://www.bullionvault.com/gold_marke ... orderboard

You may see more vaults and more metals by pressing "Edit markets" in top-left corner. It shows different prices and different orders for every vault.

By looking at HMRC guidance, I could find this article:
https://www.gov.uk/hmrc-internal-manual ... al/cg50203

TCGA92/S104(3) provides `shares or securities of a company shall not be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt with on a recognised stock exchange’.

A stock exchange lists shares or securities of the same class in a single listing. It is a question of fact whether the rules of a recognised stock exchange would list different types of share separately. If the shares are listed on a recognised stock exchange you should follow the practice of that stock exchange.

So BullionVault treats different vaults as different trades. Also, there is a difference in withdrawal rules. You can withdraw bullion from London vault to UK address, but you cannot withdraw from Singapore vault to UK address. However, I can imagine HMRC to challenge this logic.

I'll probably go with "wait 31 days" route or buy silver or platinum instead of gold.

Thanks!

[bd6759]

I stand corrected.