Do I pay tax on the uplift in my TallyMoney account?

The GBP value of your tally (1 tally = 1 milligram of physical gold) fluctuates in line with the live bullion purchase price of gold which has proven to increase in GBP value over time.  The uplift in the GBP value of your tally in your TallyMoney account is classified as a Capital Gain for tax purposes, and at the end of the tax year, the total Realised Capital Gains can be calculated.  Any Realised Capital Gains are subject to capital gains tax (CGT).  The tax advantage over a regular bank account is that interest you receive from a bank is subject to income tax at your income tax rate, on any amount above the tax-free threshold of £500 for higher-income taxpayers (£1,000 tax-free income threshold for those on the basic tax rate).  Whereas with tally, the uplift is a capital gain and therefore subject to CGT which is calculated at 24% (18% for basic rate taxpayers) on the crystalised uplift, subject to the capital gains tax-free threshold of £3,000 in a tax year.  For note, a capital gain is only ‘realised’ when you spend the tally or transfer it out of your TallyMoney account.  The uplift you may see on your tally balance is ‘unrealised’ and does not attract capital gains tax.  

Example: UK Taxpayer (in the higher tax bracket paying 40% on income) deposits £50,000 on 1st January and spends their money exactly one year later.  Each unit of tally increases against the pound historically by 10% per annum.  Let’s assume the interest on a 1-year term deposit attracts 5%p.a. (a bank current account would pay considerably less).

In this example £50,000 deposited in a Tally Account after 1 year in tally is now worth the equivalent of £55,000. For note, as long as the tally just sits in the account there is no capital gains tax to be paid.  Upon spending the tally it crystalises the capital gain making it a realised capital gain of £5,000.  In this example £3,000 of this gain would be covered under the capital gain tax-free threshold (if not offset against other capital gains) and 24% of £2,000 would be payable in tax, being £480 (on a £5,000 gain).

If the UK Taxpayer put £50,000 with their bank fixed term deposit paying 5%, they’d have £52,500 at the end of 12 months and whether they spend it or not, the customer is due to pay tax at their marginal tax rate (40% for a higher rate tax payer) on the interest amount less then tax-free threshold, so they’d pay £800 in tax (on a £2,500 gain).

This gain would be included with any other capital gains, but assuming there are no other gains.