Because gold sovereign coins are legal tender

Income Tax, Council Tax, National Insurance and VAT issues.

Because gold sovereign coins are legal tender

Postby Farmer » Wed Oct 07, 2009 9:37 am

Because gold sovereign coins are legal tender, they can be used in the public to pay wages. If we assume for simplicity that a gold sovereign with a face value of £1 is worth £100 fiat, it would be possible to pay a wage with the value of £2,000 fiat per month with just 20 coins, with a legal tender value of just £20, making a yearly wage of just £240, so avoiding taxes.

Wikipedia: Legal Tender

Coins

In the United Kingdom, only coins valued 1 pound Sterling, 2 pounds, and 5 pounds Sterling are legal tender in unlimited amounts throughout the territory of the United Kingdom. In accordance with the Coinage Act 1971,[8] gold sovereigns are also legal tender for any amount. The face values of sovereigns are 50p, £1, £2 and £5; their value in material worth is much higher. The United Kingdom legislation that introduced the 1 pound coin left no United Kingdom-wide legal tender banknote.

Currently, 20 pence pieces, 25 pence coins and 50 pence pieces are legal tender in amounts up to 10 pounds; 5 pence pieces and 10 pence pieces are legal tender in amounts up to 5 pounds; and 1 penny pieces and 2 pence pieces are legal tender in amounts up to 20 pence.[9]
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Re: Because gold sovereign coins are legal tender

Postby gepisar » Wed Oct 07, 2009 10:26 am

Farmer wrote:Because gold sovereign coins are legal tender, they can be used in the public to pay wages. If we assume for simplicity that a gold sovereign with a face value of £1 is worth £100 fiat, it would be possible to pay a wage with the value of £2,000 fiat per month with just 20 coins, with a legal tender value of just £20, making a yearly wage of just £240, so avoiding taxes.



Lost you there! Im not sure what "face value" means, im assuming(!) that for FIAT currency, the ten pound note has a face value of 10GBP. BUT its production cost is about 4pence. (Its "material" value)

For real gold coins, REAL money, there is no face value? The value of the coin is approximately = value of that weight of gold.
Im not certain, but I think that gold coins are valued at the price of the gold, and gold "soveriegns" are sold at gold value + premium (for the art work, collectability etc...)

So, a one ounce gold coin is worth circa USD1050 at the moment (660 quid?)

Strictly speaking, I'd be surprised if gold was LEGAL tender. GOLD is REAL money, therefore doesnt have the requirement to be legal tender...its real property, like land. LEGAL tender is a term used to describe the banksters fraudulent paper that forces us to accept it when someone offers it to pay a debt. If someone offered you gold instead- what would you do. Which would prefer? To be paid in paper or paid in gold?

And yes, there are bank account available that are (metal)GOLD accounts. There are people that trade in GOLD only. Since this is REAL money, would it be exempt from tax anyway?(I think thats what you were getting to)

You can buy your gold sov's here:

http://www.goldsovereigns.co.uk/2009sovereigns.php
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Re: Because gold sovereign coins are legal tender

Postby Farmer » Wed Oct 07, 2009 12:27 pm

gepisar wrote:Lost you there! Im not sure what "face value" means, im assuming(!) that for FIAT currency, the ten pound note has a face value of 10GBP. BUT its production cost is about 4pence. (Its "material" value)


It is the number you see on the face of a note or coin.

gepisar wrote:For real gold coins, REAL money, there is no face value? The value of the coin is approximately = value of that weight of gold.
Im not certain, but I think that gold coins are valued at the price of the gold, and gold "soveriegns" are sold at gold value + premium (for the art work, collectability etc...)

So, a one ounce gold coin is worth circa USD1050 at the moment (660 quid?)

Strictly speaking, I'd be surprised if gold was LEGAL tender. GOLD is REAL money, therefore doesnt have the requirement to be legal tender...its real property, like land. LEGAL tender is a term used to describe the banksters fraudulent paper that forces us to accept it when someone offers it to pay a debt. If someone offered you gold instead- what would you do. Which would prefer? To be paid in paper or paid in gold?

And yes, there are bank account available that are (metal)GOLD accounts. There are people that trade in GOLD only. Since this is REAL money, would it be exempt from tax anyway?(I think thats what you were getting to)

You can buy your gold sov's here:

http://www.goldsovereigns.co.uk/2009sovereigns.php


What you are talking about is gold sovereign bullion that are shaped as coins, meaning they are not issued gold sovereign with a face value on the coin. Now, if there is no such thing as a gold sovereign coin with a face value, and the information I posted above under the heading 'Coins' is incorrect, let me know. Lastly, gold is a metal; it only becomes money if agreed by at least two people.
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Re: Because gold sovereign coins are legal tender

Postby kevin » Wed Oct 07, 2009 12:42 pm

nope, your right and I like the idea

. A gold sovereign is a British coin weighing approximately eight grams, and with a face, or legal tender value of one pound sterling, and a diameter just over 22 millimetres. A half sovereign is a smaller British coin weighing about four grams,
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Re: Because gold sovereign coins are legal tender

Postby gepisar » Wed Oct 07, 2009 1:38 pm

Perhaps a slack choice of words on my part. I agree, gold isnt money. I think i should be more careful: GOLD has a value as a metal (precious). Making the assumption that any trade is made upon the basis that the two parties disagree on value, but agree on price, gold can be bought and sold with a money-price equivalent. i.e. one ounce worth 1050 Fed Res Notes. If I were to exchange your house for 10Kg of gold bullion it is an exchange of real properties. The point I was asking was, is this is a property trade rather than an accounting trick with paper money, and thats why I thought GOLD doesnt need to be declared legal tender.(Gold sov's being something different that gold itself **) I could just as easily swap a ferrari for my neightbours house, neither being legal tender, but both having value. Presumably my neighbour valuing the car more than his house and me vice-versa or the trade would never happen. But I digress. Im still trying to work out the implications of the OP.

**For my education, is it the case gold sovereign coins are different from gold bullion coins?

Going back to your OP, if my wages were say 1000 GBP per month, and I was paid in coins, that showed face value of £1, I would need a thousand of them.

That would settle the debt of my labour. But if my employer had to pay £100 fiat to buy those coins, he would go broke quickly. So, what you're saying is that my wages would need to be set at £10 per month and paid with the face value of £1 x 10 coins. (worth £100 quid each)

Ok, I get that.

So, essentially my wages are under the tax bracket. Thats cool.

Now, what if you just paid me in gold? Lets say we negotiated my wages at 2 ounces per month.
Would this attract tax at all? If I then converted the real gold for gold sov's (defined as legal tender - from your post) and then paid my utilites and council tax with said gold sov's Im doing ok.
The question remains: is my gold taxable. Well, suppose I was paid in stocks instead. The tax is on the capital gains, and that only happens when i monetize the stock.

Same for the gold???? i.e. its only taxable when exchanged for fiat money?
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Re: Because gold sovereign coins are legal tender

Postby MikeThomas » Wed Oct 07, 2009 2:04 pm

Off on a slight tangent here but I'm sure I remember an old law that stated you could be paid in the goods you made. For example: If you worked in a factory that made bread, you could claim the equivilant face value of bread.
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Re: Because gold sovereign coins are legal tender

Postby Farmerboy » Wed Oct 07, 2009 2:06 pm

If anyone wants to get into gold, coins - or numistatics, as they are known - is the most expensive way of doing it. and there is a difference between sovs, kruggerands, canadian maples etc. as some are seen to be more honest than others.

And, people confuse coin with bullion. Real bullion, proper bullion, is either ingot or plate and kept in vaults. Coins are difficult to turn back into cash, are a bugger to move are are virtually un-insurable. If you want to get into bullion then keep it on account with a reputable dealer.

Did I mention that I am a bullion dealer? And I don't get involved in coins.

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Re: Because gold sovereign coins are legal tender

Postby joefree » Wed Oct 07, 2009 2:10 pm

See : http://www.allbusiness.com/crime-law-enforcement-corrections/criminal-offenses/12660170-1.html

The jury found that Robert and Lori Kahre devised and used a payroll scheme that concealed and disguised the true amount of income received by his employees and the employees of the companies for which he provided payroll services. Robert Kahre maintained an office at 6270 Kimberly Avenue in Las Vegas where he claimed to pay employees in gold or silver coins, but which were actually immediately exchanged for pre-determined envelopes of cash. The face amount of the coins was one-eighth the amount of pay that the employee actually earned and received in the cash envelope. The defendants told the employees that the income was either not taxable or that they should falsely report to their income to the IRS as the face amount of the gold and silver coins.

During the course of the scheme, cash wage payments of at least $25 million were paid to Robert Kahres employees and cash payments of approximately $95 million were paid to the employees of the other contractors. No federal tax withholdings were made from the paychecks, and the wages were not reported to the IRS. The defendants told the employees not to discuss the scheme with any outside agencies. The defendants also took steps to prevent the dissemination of information that might reflect the correct amount of income paid to the employees, such as by using false invoices, keeping two sets of books, using false names on payroll records, making false statements on mortgage applications, and using nominees to conceal assets.
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Re: Because gold sovereign coins are legal tender

Postby Farmer » Wed Oct 07, 2009 2:19 pm

gepisar wrote:That would settle the debt of my labour. But if my employer had to pay £100 fiat to buy those coins, he would go broke quickly. So, what you're saying is that my wages would need to be set at £10 per month and paid with the face value of £1 x 10 coins. (worth £100 quid each)


Correct

gepisar wrote:Now, what if you just paid me in gold? Lets say we negotiated my wages at 2 ounces per month.
Would this attract tax at all? If I then converted the real gold for gold sov's (defined as legal tender - from your post) and then paid my utilites and council tax with said gold sov's Im doing ok.
The question remains: is my gold taxable. Well, suppose I was paid in stocks instead. The tax is on the capital gains, and that only happens when i monetize the stock.

Same for the gold???? i.e. its only taxable when exchanged for fiat money?


All income is taxable according to them. The example I gave just means that it would be under the value where taxation started. If you were paid in gold or anything else that has value, the inland revenue would calculate the value and tax you on it if it was more than their tax free amount. They just can't do it with the gold sovereigns because they are legal tender, so have to take the face value.
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Re: Because gold sovereign coins are legal tender

Postby gepisar » Wed Oct 07, 2009 2:29 pm

Farmerboy wrote:Did I mention that I am a bullion dealer? And I don't get involved in coins.
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