Gold Tax in the UK: VAT-Free Bullion & CGT Rules

Investment-grade gold — bars and coins of 99.5% purity or better, plus qualifying coins such as sovereigns — is exempt from VAT in the UK. That is a deliberate policy: gold is treated as an investment, not a consumer good, and taxing it would drive the trade to other centres.

The exemption covers the gold itself. If a dealer charges for storage, delivery or other services, those services may carry VAT — check the invoice. But the metal is VAT-free, which makes the UK one of the cheapest places in Europe to buy bullion.

Gold sovereigns and Britannias are legal tender in the UK, and gains on legal tender coins are exempt from capital gains tax. That means you can buy a sovereign, hold it for twenty years, sell it at a large profit, and pay no CGT at all — a unique advantage that no other gold product in Britain shares.

The exemption applies to British legal tender coins only. Foreign coins (Eagles, Maple Leafs, Kangaroos) and bars are not exempt: gains on them above the annual CGT allowance are taxable at the normal CGT rates. That is a strong reason to prefer sovereigns and Britannias for UK investors.

Jewellery is not investment gold: it carries 20% VAT when bought new from a retailer, and gains on jewellery sold at a profit are subject to CGT (though most personal jewellery is sold at a loss after making charges, so the gain rarely arises). The VAT is charged on the full retail price, including making charges.

Second-hand jewellery sold by a dealer may be sold under the margin scheme, where VAT is charged only on the dealer's margin rather than the full price — ask the dealer if this applies. Either way, jewellery is the most heavily taxed way to own gold in Britain.

Gains on gold bars and foreign coins are subject to CGT above the annual exempt amount (the allowance changes with government policy — check the current figure). The gain is the sale price minus the purchase price and allowable costs (dealer premiums, storage if deductible). Keep receipts for every purchase: without them, you cannot prove your cost.

CGT rates depend on your income tax band and change with budgets. Gold held inside a stocks-and-shares ISA or a SIPP follows those accounts' tax rules instead — but physical gold cannot be held directly in an ISA; a gold ETF or ETC inside an ISA is the usual route.

For investment, the UK tax system points clearly toward sovereigns and Britannias: VAT-free to buy, CGT-free to sell. Bars are VAT-free to buy but taxable on gains above the allowance. Jewellery is taxed at both ends.

The practical plan for most UK investors is simple: buy sovereigns or Britannias for the tax advantage, keep receipts for everything else, and check the current CGT allowance and rates before selling a large holding.