Taxation - Hope for gold rush after VAT exemption
The government is hoping that moves to make gold exempt from VAT will revive the flagging UK private investment market in the commodity.
Investors have been ignoring gold because shares and many other financial investments are VAT exempt, whereas anyone investing in gold has to pay 17.5% more than its published value.
But Customs & Excise has just released details of a new EU-wide regime that exempts ‘investment’ gold from VAT.
The measure, which follows campaigning by the UK gold trade, defines investment gold as high-purity bars or wafers and coins traded for bullion value rather than their rarity.
Dick Ware, a manager at the World Gold Council, said: ‘This will allow the retail investor to buy bullion free of VAT. No one knows what it will do to the gold market, but it can only be positive.’ He said the measure would benefit coin retailers and banks.
Despite the fact that it already enjoys VAT-exemption privileges, the measure will also benefit the London Gold market because it will iron out damaging inconsistencies in gold taxation across Europe.
The new system will come into force at the beginning of 2000. Customs is asking for responses to its consultative document on the new regime by the end of September.