VAT and Tax on Gold and Silver in the UK: The Practical Basics
This page provides general educational information about how VAT and certain taxes relate to buying and selling gold and silver bullion in the UK. It is intended to help you understand the basics, not to provide tax advice.
Quick Summary for Beginners
- •Investment gold is typically VAT-exempt in the UK, provided it meets certain criteria (purity and, for coins, specific requirements).
- •Silver bullion is generally subject to 20% VAT when purchased from UK dealers, regardless of purity or form.
- •Other taxes, such as Capital Gains Tax, may apply depending on your circumstances, the products you hold, and when you sell.
Important: This page provides general educational information only. It does not constitute tax, legal, or financial advice. Tax rules can change, and individual circumstances vary. For guidance specific to your situation, consult a qualified tax professional or refer to official HMRC guidance.
What Counts as "Investment Gold" in the UK (VAT)
Under UK VAT rules, "investment gold" is exempt from VAT. This exemption applies to gold that meets specific criteria. The key requirements are:
Gold Bars
Gold bars generally qualify as investment gold if they have a purity of at least 995 parts per thousand (99.5% pure). Bars from LBMA-accredited refiners typically meet this standard. Most standard investment-grade gold bars sold by UK dealers qualify for VAT exemption.
Gold Coins
Gold coins qualify as investment gold if they meet all of the following criteria:
- Purity of at least 900 parts per thousand (90% pure)
- Minted after 1800
- Are, or have been, legal tender in their country of origin
Most well-known bullion coins—such as Gold Britannias, Gold Sovereigns, Krugerrands, Canadian Maple Leafs, and American Gold Eagles—meet these criteria and are therefore VAT-exempt when purchased in the UK.
Why This Matters for UK Retail Pricing
Because investment gold is VAT-exempt, the retail price you pay consists only of the metal value plus the dealer's premium (covering fabrication, operating costs, and margin). There is no additional 20% VAT added. This makes the cost structure for gold more straightforward than for silver.
Why Silver Is Different (VAT on Silver)
Unlike investment gold, silver bullion does not benefit from a VAT exemption in the UK. Silver coins, bars, and rounds are generally subject to the standard 20% VAT rate when purchased from UK dealers.
How VAT Affects What You Pay
When you buy silver from a UK dealer, the price you pay includes 20% VAT on top of the metal value and dealer premium. For example, if the underlying value plus premium is £100, the price including VAT would be £120.
This VAT is charged at the point of sale and cannot be reclaimed by private individuals. It is simply part of the cost of purchasing silver in the UK.
Impact on Buy/Sell Spreads
VAT has a significant impact on the economics of buying and selling silver. When you buy, you pay VAT. When you sell back to a dealer, you typically receive a price based on the metal value—without the VAT you originally paid. This means you effectively lose the VAT amount unless the silver price rises enough to compensate.
In practical terms, this is an important consideration for anyone buying silver. It does not mean silver is a poor choice, but it does mean the price needs to move more significantly before you see a gain compared to VAT-exempt gold.
Dealer Pricing vs Spot Pricing (UK Context)
The "spot price" is the current market price for gold or silver in wholesale quantities, typically quoted in US dollars and converted to GBP. It is the baseline reference price you see on financial websites and our Gold Price and Silver Price pages.
The price you actually pay when buying physical bullion from a dealer will be higher than the spot price. This difference is sometimes called the "premium" and includes several components:
Components of Dealer Pricing
- Metal value: Based on the spot price at the time of purchase
- Fabrication: The cost of minting coins or refining and casting bars
- Dealer margin: Operating costs and profit margin
- Delivery and insurance: Secure shipping to your address
- VAT (silver only): The 20% VAT added to silver purchases
For gold, the premium over spot is typically a few percent for standard products. For silver, the combination of premium plus 20% VAT means the retail price may be 25-35% or more above the spot price, depending on the product and market conditions.
Capital Gains Tax (CGT) Basics
Capital Gains Tax is a tax on the profit you make when you sell (or "dispose of") an asset that has increased in value. Bullion can potentially be subject to CGT, depending on the circumstances.
When CGT May Apply
If you sell bullion for more than you paid for it, the profit (gain) may be subject to CGT. Whether you actually owe any tax depends on factors such as:
- The total gains you make in the tax year
- Your personal CGT allowance (the tax-free amount)
- The type of bullion you are selling
- Your overall tax position
UK Legal Tender Coins
Certain UK legal tender coins are often discussed in relation to CGT. Gold Britannias and Gold Sovereigns, for example, are UK legal tender and are commonly understood to be exempt from CGT on any gains. However, tax rules can be complex and subject to change. If CGT exemption is important to your decision-making, it is advisable to verify the current position with HMRC or a tax professional. For more on how this affects product choice, see our guide to gold coins vs bars.
Silver and CGT
Silver bullion (coins and bars) is generally subject to CGT on gains, as silver coins do not typically qualify for the same exemption as certain gold UK legal tender coins. Again, individual circumstances vary, and professional advice may be appropriate.
For current CGT rates, allowances, and detailed guidance, refer to the official HMRC Capital Gains Tax guidance. Tax rules can change, and what applies to your situation depends on your individual circumstances.
Record Keeping (Practical)
Keeping good records of your bullion purchases is sensible practice, regardless of the tax implications. Clear documentation helps in several ways:
Keep Invoices and Receipts
Retain the original invoice or receipt from each purchase. This documents the date, quantity, product description, and price paid—information that may be needed if you later sell the item or need to calculate gains.
Document Your Purchases
Consider maintaining a simple spreadsheet or record of your holdings: what you bought, when, from whom, and at what price. This makes it easier to track your overall position and provides a clear audit trail.
Why This Helps When Selling
When you come to sell, having clear records of your original purchase price (the "cost basis") is essential for calculating any gain or loss. Good records also help establish provenance, which may be relevant when selling to dealers. If you ever need to value your holdings for insurance or estate purposes, accurate records make the process much simpler.
Frequently Asked Questions
Is silver always subject to VAT in the UK?
In most cases, yes. Silver bullion (coins, bars, and rounds) purchased from UK dealers is generally subject to 20% VAT. There is no equivalent of the "investment gold" exemption for silver. Some specialist arrangements exist (such as VAT-free storage schemes where silver is held in bonded warehouses), but for standard purchases delivered to UK addresses, VAT applies.
Does VAT apply to second-hand silver?
It depends on the seller. VAT-registered dealers selling second-hand silver may use a "margin scheme" where VAT is charged only on their profit margin rather than the full sale price, which can reduce the effective VAT cost. Private individuals selling to other private individuals do not charge VAT. However, buying privately carries other risks (authenticity, recourse) that may outweigh any VAT saving.
Are gold sovereigns VAT-free?
Yes. Gold sovereigns meet the criteria for investment gold (they are at least 90% pure, minted after 1800, and are UK legal tender), so they are exempt from VAT. They are also commonly understood to be exempt from Capital Gains Tax as UK legal tender, though you should verify current tax rules if this is important to your decision.
Do I pay CGT when I sell bullion?
It depends. If you sell bullion for more than you paid and the gain exceeds your annual CGT allowance, you may owe CGT on the excess. However, certain UK legal tender coins (like Britannias and Sovereigns) are commonly understood to be CGT-exempt. Your overall tax position and the specific products involved determine whether CGT applies. For personal guidance, consult HMRC resources or a tax professional.
Why is the dealer price higher than spot?
The spot price is a wholesale reference price for large quantities traded between institutions. When you buy physical bullion at retail, the price includes fabrication costs (minting or refining), the dealer's operating costs and margin, secure delivery, and (for silver) 20% VAT. These costs explain the gap between spot and retail prices.
Is numismatic or collectible silver treated differently for VAT?
Generally, no. VAT applies to silver regardless of whether it is sold as bullion or as a collectible/numismatic item. The collectible premium you pay is also subject to VAT. There may be specific cases involving antiques or items sold under margin schemes, but for most silver coins and bars, expect VAT to apply.
Can I reclaim VAT on silver I buy for personal use?
No. Private individuals cannot reclaim VAT on purchases made for personal use. VAT reclaim is only available to VAT-registered businesses in specific circumstances. For private buyers, the VAT paid on silver is simply part of the cost.
Are there any VAT-free ways to buy silver in the UK?
Some dealers offer "VAT-free silver" schemes where silver is purchased and stored in a bonded warehouse (often outside the UK). While you own the silver, you do not pay VAT because it has not been imported into the UK for consumption. If you later take physical delivery to a UK address, VAT becomes payable at that point. These schemes suit some buyers but involve storage fees and mean you do not have physical possession of your silver.
Do I need to declare bullion purchases or holdings to HMRC?
There is no general requirement to report bullion purchases or holdings to HMRC. However, if you sell bullion and make a gain that exceeds your CGT allowance (and the item is not CGT-exempt), you may need to report and pay CGT. If you are unsure about your reporting obligations, consult HMRC guidance or a tax professional.
Does VAT apply if I buy gold or silver from a private seller?
Private individuals selling their own bullion do not charge VAT, as they are not VAT-registered businesses. However, buying from private sellers carries other risks (authenticity concerns, no consumer protections, limited recourse if something goes wrong) that may outweigh any apparent savings.
Important Notice
This page provides general educational information about VAT and tax as they relate to gold and silver bullion in the UK. It does not constitute tax, legal, or financial advice. Tax rules can change, exemptions may have specific conditions, and individual circumstances vary. Before making decisions based on tax considerations, consult official HMRC guidance or seek advice from a qualified tax professional.