Autumn Budget 2024: Impact on Capital Gains Tax

What Is the Autumn budget? 

After several difficult years, the Labour government aims to rectify and adjust policies from previous Conservative governments, promoting sustainable economic growth and fiscal responsibility. To do this the autumn budget faces a significant mountain to climb with the current deficit of £49 billion. The 2024 budget will set the economic direction and priorities of the new Labour government, and is expected to impact a number of areas.

Key Areas to Look Out For?

Tax Changes: The Budget can introduce new taxes, change existing ones, or adjust tax thresholds, affecting individuals and businesses alike.
Spending Priorities: It reveals where the government will allocate funds, impacting areas like healthcare, education, infrastructure, and defence.
Public Finances: It provides insight into the government's financial health, including its debt levels and spending plans.
Market Impact: The Budget can influence stock markets, interest rates, and the overall economic climate.

When Is the Autumn budget?

The Autumn budget is on Wednesday 30th October 2024 at 12:30 hrs GMT. It is expected to last around 1 hour and can be viewed by the live broadcast on BBC iPlayer or on the BBC News website. This will be the first budget for both the Labour appointed chancellor and the Labour Party in 14 years. She has already warned that it will involve 'difficult decisions' on tax, spending, and benefits. In addition, Prime Minister Sir Keir Starmer told the BBC that the upcoming budget would be a "tough budget".

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How Will The Budget Affect Precious Metal Investment?

With the upcoming 2024 budget, it's essential to consider how potential changes in tax policy and economic conditions could affect your precious metal investments. For example, you may not know this, but in the UK, inheritance tax (IHT) is typically charged at 40% on the value of an estate that exceeds the nil-rate band, which is currently £325,000.

If someone owned £400,000 worth of gold, the IHT would apply to the amount exceeding £325,000. This means £400,000 minus £325,000 equals £75,000. Then, IHT would be 40% of £75,000, which equals £30,000. Thirty thousand pounds is the amount of inheritance tax that would be payable, but this could even be increased in the upcoming UK autumn budget.

Key Areas to Look Out For?

Rate Changes: A potential increase in CGT could affect the profitability of selling precious metals, especially for those holding them for investment purposes.
Exemptions: Any changes to CGT exemptions for precious metals, such as those held in qualifying accounts or as part of specific investment strategies, could also impact investors.
IHT: Exemptions: Alterations to IHT exemptions or reliefs for precious metals could affect estate planning strategies and the value of precious metals passed on to heirs.
Economic Policy: Interest Rates: Changes in interest rates can influence the attractiveness of precious metals as a store of value. Higher interest rates might make other investments more appealing.
Inflation: If inflation rises significantly, precious metals, particularly gold, often gain value as a hedge against rising prices.

What Could Change for Capital Gains Tax?

For investors of precious metals, it's likely that the budget will address Capital Gains Tax (CGT) annual exempt amount once again. CGT over the last two years was one of the main cuts to help lift the UK economy, reducing CGT from £12,300 to £6,000 from 6th April 2023 and to £3,000 from 6th April 2024.

The gold price has seen a significant price increase this year, reaching a high of £2,105.04 per ounce on October 21, 2024, a 34% rise from its low of £1,571.97. This substantial gain means that investing in even two ounces of non CGT-exempt gold pushes you over the £3,000 limit for CGT when you sell. The UK autumn budget could include a reduction or elimination of the CGT allowance, making it more challenging to hold and sell non-CGT-exempt gold bullion without incurring taxes.

The current CGT rates are Basic rate taxpayers pay 10% on gains, while higher-rate taxpayers pay 20% on chargeable assets. However, it's believed that for higher-rate tax payers they could have to pay up to 45% if announced in the 2024 budget, which is a massive increase of 25 percentage points!

How to Prepare for CGT Changes?

It's essential that you access your own current precious metals holdings and understand the potential tax implications on your portfolio. For example, someone in the UK may have invested in one-hundred low-premium Krugerrands, a non-CGT-exempt product. But when they come to sell, they may have to pay more in CGT if they had opted to pay a slightly higher premium on 100 CGT bullion products.

CGT coins are only produced by The Royal Mint as they have a face value, making them British legal tender. Examples of CGT-exempt coins include Britannias and post-1837 sovereigns coins, which allow you to make unlimited tax-free profits on their sale!

Additionally, you could benefit from CGT-exempt bullion, also offered as 'our choice', allowing investors to maximise their investments. Our CGT-exempt 'our choice' bullion products are selected from three conditions: new, pre-owned, or mint condition, enabling us to offer the most competitive prices based on the coin's condition. You can learn more in our complete our choice bullion guide, which explains everything you need to know before investing in our product offering.

Some of our most popular CGT-exempt our choice bullion products include the following, but are not limited to these options.

• CGT exempt 1 oz gold bullion coins (New)
• CGT Exempt 0.25 oz Gold Bullion Coin - (Minty)
• CGT exempt 1 oz Silver Coins - (New)
• CGT Exempt 10 oz Silver Coins - (New)
• CGT Exempt 1 kg Silver Coins - (New)

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