After the Budget: Capital Gains Tax Rises and the Coins It Cannot Touch

5 min read

The waiting is over. On 30 October Rachel Reeves delivered a Budget that raised taxes by £40 billion a year, the largest rise in a single Budget since 1993. Capital Gains Tax went up on the day it was announced. For savers the headline is simple. Gains on most assets now cost more to keep. Gains on UK legal tender gold coins remain exempt from Capital Gains Tax for UK residents.

What changed on Budget day

From 30 October the main rates of Capital Gains Tax rose from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. The rates on residential property, already at 18% and 24%, were left where they were. In effect, shares, funds and most other assets are now taxed at the same rates as a second home.

Business Asset Disposal Relief will rise in two steps, from 10% to 14% in April 2025 and to 18% in April 2026. The annual allowance stays at £3,000, down from £12,300 just two years ago.

Some of the smaller print matters too. The Capital Gains Tax rates on carried interest, the share of profits paid to private equity managers, rise to 32% from 6 April 2025. From April 2026 carried interest moves into the income tax system altogether. Each change pulls gains closer to the way income is taxed.

Other changes point the same way. Inheritance tax thresholds remain frozen until 2030. From April 2027 unused pension pots will fall into the estate for inheritance tax. Employer National Insurance rises to 15% from next April. The ISA allowance stays at £20,000 a year and is now frozen until April 2030, which means it buys a little less shelter each year as prices rise.

Who actually pays the tax

Capital Gains Tax is paid by fewer people than many assume. HMRC figures show 369,000 taxpayers were liable for it in the 2022 to 2023 tax year. The bill is concentrated at the top. About 6,000 people with gains of £2 million or more made over half of all payments.

That might suggest most savers can ignore the change. The trouble is that the allowance has fallen so far that ordinary people are now caught. When the first £12,300 of gains was tax free, a retired couple selling some shares to help a grandchild with a deposit might never have paid a penny. With only £3,000 each free of tax, the same sale can now bring a bill. That bill is now charged at a higher rate too.

Which? set out a simple example on Budget day. A higher rate taxpayer who sells shares for a gain of £12,000 pays tax on the £9,000 above the allowance. At the new 24% rate that is £2,160. At the old 20% rate it would have been £1,800. The difference of £360 comes from the rate change alone, on a gain many families would think of as modest.

We said savings would be the target

In our article before the Budget we explained why Capital Gains Tax was in the frame. The Government had pledged not to raise income tax or National Insurance on working people. That left the taxes on wealth already built. Four weeks later, that is where the Chancellor went.

The increase is smaller than some of the reports had suggested. But the direction is clear. It follows years of a shrinking allowance. A higher rate taxpayer with a £20,000 gain on shares now pays £4,080 after the allowance, up from £3,400 before Budget day.

A tax on inflation, now at a higher rate

The point we made in October matters even more now. Capital Gains Tax is charged on the gain in pounds, not on the gain in real buying power. When the currency loses value, prices rise in pounds. Part of every gain is simply the pound shrinking.

With public sector net debt close to 100% of GDP, the state has a quiet interest in letting inflation do some of the work of reducing what it owes. Higher taxes on nominal gains are the other half of the same arrangement. Savers are squeezed from both sides. Gold, priced in the same shrinking pounds, has been one of the few assets to keep pace.

There is no relief for inflation on these gains. If an asset rises only in line with prices, the owner is no richer in real terms. The tax is still charged on the full rise in pounds, which is why a higher rate bites harder in years when the currency is losing value quickly.

The coins the Budget did not touch

Britannias and Sovereigns are UK legal tender. Gains on them are exempt from Capital Gains Tax for UK residents. Nothing in the Budget changed that. There is no allowance to use up, no gain to report and no rate to worry about on these coins.

The reason is written into the tax rules rather than into any one Budget. HMRC's own Capital Gains Manual states that Sovereigns minted in 1837 and later and Britannia gold coins are currency. Like all sterling currency, they are exempt under section 21 of the Taxation of Chargeable Gains Act 1992. Coins that are not UK legal tender, such as the South African Krugerrand, are treated as chargeable assets.

The gap between UK legal tender gold coins and other assets has simply grown wider. A gain on shares is now taxed at up to 24%. The same gain on a Britannia or a Sovereign stays with you.

Graded coins add certainty to that tax position. Each coin sealed by NGC or PCGS carries its own certification number, verifiable online in seconds, which makes ownership and condition clear for years to come.

Gold's October record

Gold had a strong run into the Budget. It rose about 4% in October and touched a new record high on 31 October, one of eight new highs in the month. By the start of November it had set 39 record highs this year, the second highest annual tally on record according to the World Gold Council.

Much of the buying came from Asia and from central banks, not from Western buyers. The United States went to the polls yesterday. The Federal Reserve and the Bank of England both announce rate decisions tomorrow. Whatever comes next, the long-term drivers of gold remain the same: government debt, the falling value of paper money and steady central bank demand.

What it means for your savings

A Budget is a reminder that the rules on money are set by people. People change them. The allowance was cut twice before this Budget and the rates have now risen too. Few savers can plan around rules that move every year, which is why many look for the parts of the system that have stayed the same.

The legal tender exemption is one of those. It does not depend on the rate a Chancellor chooses or on the size of the allowance. It depends on what the coin is. That is a simpler foundation for long-term savings, because the rule that matters does not move with each Budget.

Speak to a specialist

If you would like to talk it through, call a specialist on 0208 064 0076, Monday to Friday, 9am to 5pm, or book a call at a time that suits you.

Book a call

Sources

This article is for information only. The value of gold can go down as well as up.

Back to blog

Gold Insights are independent articles, researched and written by our own team at Gold Tier Advisory.