Why investors are switching from bullion bars to coins amid Budget capital gains tax fears

The sale of bullion bars has suffered a sharp drop amid fears Chancellor Rachel Reeves could hike capital gains tax in the Budget later this month.

The Royal Mint has revealed sales of bullion bars, which are subject to capital gains tax, fell by 11 per cent year on year in the three months to the end of September 2024.

It also said that there is a growing appetite among investors for gold and silver in the last quarter and that they are increasingly favouring products that are exempt from capital gains tax, such as bullion coins.

Sales of bullion coins on The Royal Mint’s website surged to a record high in the third quarter, with revenues up 110 per cent compared to the same period last year.

The Royal Mint said this was mainly driven by a significant uplift in gold bullion coin sales.

Between July and September 2024, revenues from silver and gold coin sales rose by 42 per cent and 118 per cent respectively, when compared to the same period in 2023.

It also said that gold prices in sterling are now up 20 per cent this calendar year due to a combination of ongoing geopolitical uncertainty, global volatility and falling interest rates.

This price momentum fuelled interest in gold, The Royal Mint added, with its gold bullion sales rising 63 per cent year-on-year.

Similarly, the total number of customers buying gold rose by 11 per cent over the same period.

Investors favouring capital gains tax-exempt products

Stuart O’Reilly, market insights manager at The Royal Mint, said: “Gold prices have had multiple tailwinds in recent months.

“We have seen interest rates start to reverse course both sides of the Atlantic. Economic uncertainty and heightened geopolitical risk is leading to competition for safe haven assets.

“This is driving broadly positive market sentiment, fuelling both demand for precious metals, and activity from those looking to realise capital gains.

“Beneath the surface, the type of assets investors prefer is changing. While gold and silver can help investors strengthen and diversify their portfolio, our record quarter for bullion coin sales reflects the renewed focus on tax efficient investing.

“Our data suggests that investors are increasingly keen to protect their future investment gains, favouring CGT-exempt investments such as bullion coins over products that are subject to CGT.

“It’s also interesting to see more investors actively using The Royal Mint’s Buy Back Service, reflecting a proactive approach to closely monitoring the market and making strategic portfolio adjustments.

“With the UK budget approaching and uncertainty surrounding the US election, we may see further shifts in investor behaviour.”