Buying gold is a long-established way for UK investors to preserve wealth, hedge against inflation, and diversify away from traditional financial assets. One of the most frequently asked questions, however, is how to buy tax free gold and what “tax free” actually means in practice.
In the UK, certain forms of physical gold can be purchased and held in a way that is free of two major UK taxes: Capital Gains Tax (CGT) and Value Added Tax (VAT). Understanding the rules is essential, as not all gold qualifies, and misunderstandings can lead to unexpected tax liabilities.
This guide explains how tax free gold works in the UK, which gold qualifies, and how to stay fully compliant.
What Does “Tax Free Gold” Mean?
When people refer to tax free gold in the UK, they are usually talking about Capital Gains Tax (CGT) rather than VAT or income tax.
Gold itself does not produce income, and physical gold is not classed as a financial instrument. The main tax consideration arises when gold is sold for a profit.
Some UK gold coins are legally structured so that any gains made on sale are exempt from CGT. This is what makes them attractive to long-term investors.
Why Some Gold Is Exempt from Capital Gains Tax
Under UK tax law, legal tender coins issued by the UK are exempt from Capital Gains Tax. This exemption applies regardless of the coin’s metal content or the size of the gain.
The CGT exemption exists because UK legal tender coins are treated as currency rather than chargeable assets.
The key authority governing this is HM Revenue & Customs, which confirms that UK legal tender coins are not subject to CGT for UK residents.
Which Gold Coins Qualify as Tax Free?
To buy tax free gold in the UK, you must choose UK legal tender gold coins. The most common examples include:
Gold Britannia Coins
Gold Britannias are issued by the The Royal Mint and have been legal tender since 1987. They are one of the most widely traded and recognised gold coins globally and are fully CGT-exempt for UK residents.
Gold Sovereigns
Gold Sovereigns are historic UK coins that remain legal tender today. Despite their smaller size, they are also CGT-exempt and highly liquid in the UK market.
Both Britannias and Sovereigns meet the criteria for tax free gold from a CGT perspective.
Is Tax Free Gold Also VAT Free?
This is an important distinction.
Investment-grade gold bullion, whether coins or bars, is VAT exempt in the UK provided it meets specific purity standards. Gold bars and qualifying coins that are at least 99.5% pure generally fall under this exemption.
However, VAT exemption does not automatically mean CGT exemption. Gold bars, for example, are VAT free but not CGT free.
This is why UK legal tender coins are often preferred by private investors.
Gold Bars vs Tax Free Gold Coins
Gold bars are a popular choice for larger purchases due to their lower premiums, but they are treated differently for tax purposes.
| Gold Type | VAT | Capital Gains Tax |
| UK Legal Tender Coins | VAT exempt | CGT exempt |
| Gold Bars | VAT exempt | CGT may apply |
| Non-UK Coins | VAT exempt | CGT may apply |
For investors specifically researching how to buy tax free gold, UK legal tender coins remain the most straightforward option.
Do You Need to Declare Tax Free Gold?
Although CGT-exempt gold does not need to be declared when sold at a profit, investors should still keep accurate records of purchase prices, invoices, and sale documentation. Treating this documentation as a means to secure a clear financial path for heirs and protect against future audits transforms record-keeping from a mundane task into a smart strategy.
This is particularly important for portfolio planning, estate planning, or if HMRC requests clarification on asset disposals.
Gold ownership itself does not trigger reporting obligations simply because it is held.
Is Gold Regulated by the FCA?
Physical gold is not regulated by the Financial Conduct Authority because it is not classified as a financial product or investment instrument.
That said, reputable gold dealers in the UK operate under strict consumer protection, AML, and trading standards obligations. Buyers should ensure they are dealing with established firms that provide clear pricing, secure delivery, and transparent documentation.
Common Mistakes When Buying Tax Free Gold
Many first-time buyers make avoidable errors, including:
- Assuming all gold is tax free
- Buying gold bars expecting CGT exemption
- Purchasing non-UK coins without understanding the tax implications
- Failing to retain proof of purchase
Understanding the distinction between VAT exemption and CGT exemption is crucial when planning a gold investment.
Is Tax Free Gold Suitable for Everyone?
Tax free gold is particularly attractive to:
- Higher-rate and additional-rate taxpayers
- Investors who have already used their annual CGT allowance
- Those seeking long-term wealth preservation
- Investors looking to diversify away from regulated financial assets
As with any asset, suitability depends on personal circumstances, time horizon, and wider portfolio structure.
How To Buy Tax Free Gold Safely
If your goal is to buy tax free gold in the UK, the most reliable route is to focus on UK legal tender gold coins, such as Britannias and Sovereigns, purchased from an established dealer.
Understanding the rules upfront ensures you benefit from gold’s defensive qualities without unexpected tax consequences later on.
Disclaimer:
This blog is for informational purposes only and does not constitute financial advice. Buying physical gold as an investment involves risk, as the value of precious metal prices can be volatile. Historical financial performance does not necessarily give a guide of future financial performance. We recommend that you conduct your own independent research and seek professional tax, legal and financial advice before making any investment decisions.
