Saturday, January 26, 2008

Buy Silver in the UK.

There are a few points to consider if you want to buy silver in the UK.

Silver has been on a steady incline for some years. The accompanying chart shows that silver is on a 10 year rise and likely to so continue when you consider the world wide shortage of silver as well as the economic instability of world markets.

So, how does one buy silver in Britain or the UK ?

Unless your into silver for the very long term, it is better to buy silver in the UK rather than from overseas such as the US for example. Principally because of the tax considerations and shipping costs.

Tax on Silver
The customs and duty one pays to import silver into the UK is around 15 percent, plus you have the shipping costs which can be anywhere 3 to 5 percent. Moreover, the carrier is going to charge you for collecting the tax adding a further 8 to 16 pounds to the injury. It is even possible that would exceed the cost of the tax itself. That has gotta hurt!

This makes it unsuitable to import silver for investment and even for collectors unless price is not a consideration of course.

However, one can buy silver overseas and if it is kept overseas and not imported into the UK then you will not have an issue with the tax man. If you sell that silver at a profit however you will be liable for tax as a British tax payer.

So it would seem the best silver is the silver you can buy in the UK.

Buy Silver in the UK
There are some points worthy of mention here also.

There are not very many silver coin dealers in the UK surprisingly. You can buy silver in the form of bullion bars on eBay where private individuals and dealers generally trade. The issue here is that the premiums are high and if you want to buy silver for investment or to retain asset value, you need to look for that silver with the lowest premium.

Unlike gold, silver is not VAT exempt and, even on eBay you will find VAT will be added to the purchase price.

However, VAT is only payable on silver if the seller is VAT registered. The government says they want to encourages small businesses by allowing them to sell VAT discounted goods. This seems to have no effect on silver prices, however, since buyers do not distinguish between registered and non-registered sellers and generally do not care. Price and genuineness is a more major issue for buyers.

It takes a good sort around to find silver bullion with a low premium. Sometimes it might be worth while importing 1000 oz bars if the premium is really low and the VAT can be absorbed by the increase value long term.

As the silver price climbs higher the premium is likely to narrow for specific weight bars as the manufacturing costs, shipping and other costs remain the same, Only the value of the silver is different.

Silver coins generally have even higher mark ups than bars and, although they may be good for the numismatic coin enthusiast, they are impractical for the silver investor.

Old Silver Coins
However one solution which many British people employ is to accumulate old florins, half crowns and shillings. These are pre-decimal coins phased out in the early 1970s. Those coins minted prior to 1920 contain 92.5 percent silver, those from 1920 to 1947 are 50 percent silver.

These can often be bought in bulk at a relatively low premium and have little value for coin collectors, due most likely, to them being worn coins and not of collector quality. But they do contain silver! And, importantly, there is no VAT on their purchase.

Mostly these are for sale by coin dealers and likely on eBay

Silver Investments in the UK
Other options for buying silver in the UK are silver EFTs, mining stocks and Silver Accounts.

Silver EFTs, or exchange traded funds, are simply accounts where the silver is held by a bank or some such institution as custodian and your account represents your holding of silver by that institution. The advantage here is the easy of transactions, no shipping, storage or security issue to contend with. Barclays silver ETF is a good example of a silver EFT.

Mining stocks are another way of investing in silver. These are not so assured however since the mining company you are investing in may have other interests, such as other metals which may not be so favorable as silver in the market place. Plus various management policies, buying and selling of companies and takeovers, etc, all can affect the share price. is a company where you can open a silver or gold account and deposit funds which are used to purchase gold or silver. That gold or silver is kept in bank vaults and your amount of gold or silver is reflected by your purchase. This can be done through a broker or you can even do it yourself by going to

Cashing in your Silver in the UK
There are some implications to consider if and when you want to cash in silver in the UK. If you make a profit on a sale of silver you are up for the unpopular Capital Gains Tax (CGT). There are some changes in the wind with this tax apparently but analysts expect it to eventually be a flat 18 or s percent with none paid on the first £9,200 which could be shared with a partner.

You could offset some of the CGT on profits by investing in a Individual Savings Account (ISA). This can be as much as £7,000. This only applies to shares and EFTs however, not silver bullion.
Anyway by a judicious use of tax allowances one can legally avoid paying tax on the first £32,400 (about $65,000) of silver profits.

When the end of the tax year on April 5th is nearing, one could then maximize one's silver profits by selling just enough of one's silver before April 5th using up as much of the tax free allowance for that tax year and then repurchase again to take advantage of the following year allowance. Of course this strategy will depend on how much it costs to sell and buy back the silver plus other factors such as your own personal financial position. In all cases, with anything to do you’re your tax position and financial arrangements always consult your own personal financial advisor.

So there you have it. It is possible to buy and sell silver profitably in the UK provided you spend some time doing due diligence before you buy silver in the UK

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