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One of the major benefits of investing in gold is that unlike some other investments, it can offer specific tax advantages which could help you keep your tax liabilities to a minimum.
With several tax thresholds remaining frozen, and many allowances reducing, the amount many of us hand over to the taxman has steadily increased, so making the most of ways to reduce your tax burden is crucial.
For example, the maximum amount you can earn tax-free in profit when you sell something was previously £6,000, but this was reduced to £3,000 in April 2024, and it remains at this level in the current 2026/27 tax year. Over the course of the past couple of years, this tax-free allowance – also known as the Capital Gains Tax Annual Exempt Amount – has decreased by over 75%. This means that growing numbers of investors are now liable to pay CGT on any profits they make when selling assets.
However, all British legal currency bullion coins are exempt from Capital Gains Tax for UK residents. Similarly, gold bullion is usually free from Value Added Tax (VAT), provided you aren’t VAT registered.
Here, we explain how these exemptions work, and how to get started if you’re thinking about investing in gold for the first time.
Please remember that investing in gold is not without risk and before making any investment decisions, you may want to seek advice from a professional independent financial adviser.
How do VAT and Capital Gains Tax (CGT) work?
Value Added Tax, or VAT, is payable on the goods and services that we buy from VAT-registered businesses. It typically adds 20% to the price of items, although there are lower VAT rates charged on certain items, such as children’s clothing and car seats, for example.
Businesses have to register for VAT if their VAT taxable turnover is more than £90,000, and must then include VAT in the price of the goods and services they sell.
However, under UK tax law, gold bullion is regarded as investment gold and is therefore exempt from VAT, although this didn’t always used to be the case. Prior to 2000, gold sales in the UK were subject to VAT, so buyers had to pay an extra 20% on the purchase price. This meant that the UK was at a disadvantage to other EU member states, many of which either charged VAT at a much lower rate on gold, or didn’t charge it at all. An exemption was put in place on 1 January 2000 to remove this disadvantage, and ensure that gold would be treated in the same way as other investments, such as stocks and shares, which are also exempt from VAT.
This does not apply to silver and platinum bullion, however, which is subject to VAT at a rate of 20%.
Capital Gains Tax, meanwhile, is applied to any profit you make when you sell or dispose of assets, if that profit is above your yearly CGT allowance, known as the Annual Exempt Amount. For 2026/27, as mentioned, the Annual Exempt Amount is just £3,000. It’s important to remember that the Annual Exempt Amount covers your total gains from all assets, so if you sold four different assets and made a combined profit of £5,000 across all of these, you’d have exceeded your Annual Exempt amount by £2,000.
The rate of Capital Gains Tax you’ll pay depends on which Income Tax band you fall into, and what kind of asset you have disposed of. If you pay higher or additional rate Income Tax, the CGT rates are fixed. You must pay 24% on your gains from a residential property and 20% on your gains from other chargeable assets. If you’re a basic rate taxpayer, you’ll pay 18% on gains from a residential property that isn’t your main home, and 10% on your gains from other chargeable assets.
So, for example, if you’re a higher rate taxpayer and you bought a painting for £10,000 and subsequently sold it for £20,000, your profit would be £10,000. Once your £3,000 Annual Exempt Amount is deducted, this leaves you with £7,000 which is liable to CGT at a rate of 20%, meaning your CGT bill would be £1,400.
However, if you were to invest the same £10,000 in gold bullion coins, and again sold them later for £20,000, not CGT would be payable on your £10,000 profit, so you’d be able to keep the full amount. Please bear in mind that these are only examples, and the value of any investment can go down as well as up. It’s also important to remember that should you find yourself liable to CGT, losses on the sale of other taxable assets can be set against gains before the final calculation is made.
Tax rules can be complicated and rates and thresholds are subject to change. When it comes to financial and wealth planning, it’s therefore often recommended to seek professional advice on the options available to you to help keep tax bills to a minimum.
Buying bullion coins
If you’re looking to buy bullion coins for the first time, you don’t need a big lump sum to get started, with prices starting from less than £100 or just £25 if buying digital gold.
You can find out more about buying gold in our guide How to buy gold.
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