Tax-free gold investment

Investment-grade gold in the form of gold coins or gold bars, does not attract VAT. This tax treatment was introduced in 2000 to bring gold in line with other VAT-free investments like stocks and shares and harmonise with the rest of the EU which did not charge tax on gold.  

The stipulation remains that only investment grade gold is VAT exempt. This means the gold must be of a particular type (specific bars or coins) and of a minimum standard of purity, specifically 22-carat gold and above is considered investment-grade. 

The majority of gold is subject to capital gains tax when sold, except for coins minted by the Royal Mint which are regarded as legal tender in the UK.  

If you were to present a gold coin, such as a Gold Britannia or Gold Sovereign, to the bank, it would class that coin as being worth its face value, e.g. £1, rather than its retail value, e.g. £350. This illustrates the coins’ status as a form of currency. 

It is a firm principle of UK law that we do not pay tax on the flow of currency, and therefore you do not have to pay tax on transactions involving Royal Mint minted gold coins. 

Depending on how much gold you are buying and need to store, choosing legal tender gold coins allows your gold purchase to be exempt from capital gains tax (depending on individual circumstances). 

Demand for tax free gold coins is much higher than most other types of gold. This means they are easily liquidated.   

Because tax-free gold coins come in different sizes and denominations, customers have more flexibility when choosing to sell a specific amount of gold as opposed to having to sell more than they want to (if liquidating a gold bar for example) and be left with cash that they would otherwise want in physical gold. 

Gold coins attract a higher premium because they carry an additional cost of the design of the metal, but they are easy to store as they can be bought in smaller amounts.  

Legal tender gold coins like the Britannia and the Sovereign, minted by the Royal Mint, are exempt from Capital Gains Tax, making them ideal for investment despite the higher premiums they fetch compared to bars. 

There are many types of international gold coins, like the American Eagle, Canadian Maple or the south African Krugerrand. However, these coins are not minted by the Royal Mint and do attract capital gains tax.  

Gold bars, the most common form of gold bullion, are supplied in larger quantities of gold per unit and are more difficult to liquidate and store. Bars are cost-efficient, as they don’t carry the additional cost for the design of the metal that gold coins do, and it’s easier to get them in investment grades. However, gold bars are not considered legal tender, and are therefore not a capital gains tax-free investment. 

Even with gold bars and other gold coins, Capital Gains Tax typically only applies to gains made above the annual exemption amount for that financial year, depending on individual circumstances.. 

Gold bars come in many different denominations, from as little as 1 gram, rising in increments through 5g and 20 g, to 100g, 500g and 1kg. The smaller bars will attract a premium over the larger bars because they have similar manufacturing costs but a lower sale price.  

To qualify as ‘investment’ grade, gold bars must be no less than .995 purity and of a weight accepted by the bullion markets, or minted after 1800 and some form of legal tender (past or present) if in coin form. (For more details, see VAT Notice 701/21: Gold – The Pietra Sussan Company’s experts will be able to assist with enquiries of this nature.) 

All gold supplied by the Pietra Sussan Company will conform to these standards as it is intended for tax-free gold investment.