Gold and silver have been a hot topic over the past year, with prices rising sharply and more people considering them as a potential investment.
In our latest podcast, Francesca is joined by Graeme and Charlie to talk through the tax and VAT implications that many people simply are not aware of.
It’s important to note that the discussion is not investment advice. Instead, the focus is on helping you understand the tax side of buying and selling gold and silver so you can make informed decisions.
You can watch the full conversation on YouTube here:
https://www.youtube.com/watch?v=ob0XJyeXrg0
Why is everyone talking about gold and silver?
Over the past 12 months, the value of gold has increased significantly, with prices reaching around £3,700 per ounce. As a result, more people are considering buying gold, often based on the belief that it is completely tax-free.
As Graeme explains, this is one of the most common misconceptions. The tax treatment depends entirely on what you buy and how you buy it.
Is gold really tax-free?
The short answer is… sometimes.
Certain gold coins, such as Britannias and Sovereigns, are classed as legal tender in the UK. This means that if you sell them at a profit, they are exempt from Capital Gains Tax.
However, this exemption does not apply to all gold.
If you buy gold bars and sell them for more than you paid, any gain may be subject to Capital Gains Tax. This is where many people get caught out, particularly if they have relied on general advice without understanding the detail.
What about silver?
From a Capital Gains Tax perspective, silver is treated in a similar way to gold.
The key difference is VAT.
Investment gold is VAT exempt. Silver is not.
If you buy silver from a supplier such as the Royal Mint, you will typically pay 20% VAT. This immediately impacts your potential return, as the value would need to increase significantly just to recover that initial cost.
There are ways to avoid UK VAT, such as storing silver offshore, but this introduces other considerations such as storage costs, access and risk.
Buying through a company
For business owners, another common question is whether gold or silver can be purchased through a limited company.
While a company can invest in gold and silver, there are important tax points to understand:
- There is no corporation tax relief when you buy gold or silver
- VAT on silver is not recoverable
- Any increase in value is subject to corporation tax when sold
Unlike buying business assets such as vehicles or equipment, purchasing gold or silver does not provide an immediate tax deduction. It is treated as an investment rather than a business expense.
Jewellery and hidden tax risks
Many people are more likely to sell jewellery than gold coins or bars, especially given the recent rise in gold prices.
This is an area where tax is often overlooked.
Jewellery is treated as a “chattel” for Capital Gains Tax purposes. If you sell an item for less than £6,000, there is generally no tax to pay.
However, if you sell jewellery for more than £6,000 and make a profit, you may need to consider Capital Gains Tax.
Each individual also has an annual Capital Gains Tax allowance of £3,000, which can reduce or eliminate any tax due. However, this depends on your overall gains in the tax year.
Why the detail matters
A key theme throughout the discussion is that small differences can have a big impact.
- Buying coins instead of bars could mean no Capital Gains Tax
- Buying silver instead of gold could mean a 20% VAT cost upfront
- Buying personally instead of through a company could change the tax outcome entirely
Relying on general statements such as “gold is tax-free” can lead to unexpected tax bills and lower returns than anticipated.
In summary
Gold and silver can be attractive assets, particularly in uncertain economic times, but the tax and VAT treatment is not straightforward.
The right approach depends on what you are buying, how you are buying it and your individual circumstances.
Understanding the tax position in advance can make a significant difference to your overall return and help you avoid costly surprises.
🎧 To hear the full discussion and get practical insight, watch the full podcast episode here:
