The Royal Mint, the UK’s home of precious metals, has today revealed new data showing how UK investors are preparing for the upcoming Capital Gains Tax (CGT) changes.
A survey of over 2000 UK investors, undertaken by Censuswide on behalf of The Royal Mint, reveals that less than a third (31%) of UK investors are aware of the new rule changes. However, over half (53%) of investors said the new rule changes will prompt them to create a wealth plan so that they can secure their current and future investment gains.
The research further found that 35% of investors feel prepared for the new rules, rising to 50% among Gen-Z investors who are likely to have smaller investment pots. Of those that have taken steps to prepare for the changes, nearly a third (31%) have reviewed their current investments in order to assess their risks. 36% have consulted a specialist tax adviser since the new rules were announced to receive advice and increase their portfolio’s resilience.
Investor strategies shift toward CGT-exempt assets
First introduced in 1965, CGT is a tax on profit when individuals or companies sell an asset, outside of a tax-free wrapper, that increased in value.2 Right now, the CGT tax-free allowance for investments is £6,000 but this is set to halve to £3,000 from the 6th April 2024. In light of the upcoming changes, the research shows how investors are laser-focused on finding solutions and strategies to mitigate future tax liabilities. Half of UK investors said they are motivated to invest in CGT-exempt investments while nearly a third (30%) are proactively restructuring their investment portfolio to avoid being impacted.
As investors think creatively about their investments, the new rules are prompting investors to consider investing in bullion coins. 44% of UK investors said they are now considering investing in bullion coins to avoid being impacted by the tax changes. Recognised as legal British currency, bullion gold, silver and platinum coins are exempt from CGT, meaning UK investors can make unlimited tax-free profit on all bullion coins.
With gold prices hitting a new all-time high in March, for those considering investing in bullion, a key motivation for investing is wealth building. 36% of respondents said they would consider investing in gold to accumulate long-term wealth, while a third said they were motivated by wealth preservation (35%) and investing in a safe-haven asset (33%).
Bullion coins are becoming increasingly sought after among investors with The Royal Mint seeing a record number of customers buying bullion via its website during 2023. For many investors, bullion coins are a key part of a diversified portfolio that can manage tax and investment risks with the silver Britannia topping the most popular product of 2023 among Royal Mint precious metals customers. Over the last five years, the value of a 1 troy ounce gold coin in sterling has increased significantly (+72%)3, outstripping average saving rates and the FTSE 100. For those that have divested, this investment growth would have been exempt from tax.
Commenting on the research, The Royal Mint’s Director of Precious Metals Andrew Dickey, said: “While it is concerning that many investors remain unprepared for the imminent changes, the new rules are prompting investors to review their tax exposure and wealth plans to secure future investment gains. Whether investors are looking to capitalise on the CGT-exemption for bullion coins or looking to grow their portfolio with a safe-haven asset, gold is becoming a go-to investment for many with tax risk and wealth building on their mind. As time runs out before the changes, it is important for investors to explore avenues that allow them to protect their investment gains.”
The Royal Mint provides a range of wealth management solutions tailored to customers’ individual needs including Gold for Pensions and a Physical Gold Exchange Traded Commodity, RMAU. For more information, visit https://www.royalmint.com/invest/wealth-management/.
