From Indiana Jones to Goldfinger, gold has been the main character in enough films for us to know how precious it is. However, luckily for us, there’s no need for an Italian Job to get our hands on some.
One of the reasons gold is so popular is that it’s a valuable investment. Compared to other assets like stocks and cryptocurrencies, long-term, the value of gold remains consistent. Unlike the British weather. ☔
However, to really make the most of your investment in gold, you need to understand a thing or two about gold tax implications.
If you don’t know that much about the intricacies of taxation in the UK, this guide is written for you. It will:
- Simplify gold taxation and the UK’s gold tax laws
- Explain capital gains tax (CGT) on gold
- Answer common questions like, “Is gold tax-free?”, and, “Do you pay tax on gold in the UK”?
- Look at the exemptions on precious metals taxation in the UK
If you are selling gold internationally, it’s also important to know about IRS gold tax regulations, gold mining tax, and international gold tax compliance. But let’s start at the bottom and understand Capital Gains Tax and gold first.
Why invest in gold?
Buying and holding precious metals like gold can be a secure and lucrative long-term investment as, unlike your typical savings account, it’s a hedge against inflation.
In the long-term, it has always increased in value over time, despite economic and geopolitical uncertainty. Plus, it’s not subject to annual income tax.
In fact, you’re only subject to tax once you decide to sell your gold. If you make a profit on the gold you sell, you’ll have to pay capital gains tax (CGT).
Remember, it’s important to pick the right time to sell your gold investments in the UK. And yes, that can be tricky. You’ll need to stick to the market price like glue to try to decide when the best time to sell is. Be prepared you won’t always get it right. If you’re really unsure, it can be useful to speak with a financial advisor or investment broker.
Investing in gold in the UK
The UK is a well-established market for gold, making it easy to buy and sell for profit.
Precious metals such as gold bars and gold coins are VAT-free in the UK, both when you’re buying and selling. It’s a golden opportunity to invest without taxing your wit or wallet.
Buying gold in Switzerland
You can buy gold VAT-free and duty-free from Switzerland.
Switzerland offers a great range of quality and authentic gold products, including bars and coins. And it’s somewhere reliable you can buy and store gold, mostly thanks to its political stability. Switzerland is the world's biggest gold refiner with 3 of the world's largest refineries (including MKS PAMP, based in the Italian-speaking region of Ticino).
Gold dealers based in Switzerland (like us) often offer competitive exchange rates, secure shipping, and even storage for UK buyers, making it easy to invest in Swiss gold.
Not to toot our own horn, but at GOLD AVENUE, we do all of the above so you can enjoy a hassle-free gateway to investing. Investing in gold with us is easy and tax-free at purchase and storage, and we’ll even store it for you in our high-security Swiss vaults. We’ll also help you to buy and resell at market price with no commission.
While our home base, Switzerland, offers VAT-free gold and tax-free storage, as a UK resident you must still declare any gold holdings to the UK government. But what tax do you need to pay on gold in the UK?
Do you pay tax on gold in the UK?
You don’t pay tax on gold you buy or hold. You only pay tax on gold in the UK if you sell it for a profit. And only the profit is liable to tax. Any gold that you sell that is NOT legal tender is taxable.
Legal tender is any form of currency or coins that can be used for transactions. In the UK, that includes coins in circulation like the Charles III Britannia coins and Gold Sovereigns with the Royal Mint mark. They’re not subject to the same tax regulations as other gold which we’ll explore in more detail now.
Capital Gains Tax
Capital gains tax (CGT) is a tax on profits made from selling assets like stocks, property or gold.
In the UK, each person gets a yearly CGT allowance. This is an allocated amount of profit you're allowed to make before paying CGT.
As of the tax year 2023/24, the UK’s annual CGT is £6,000. That means if you sell your gold for a profit of over £6,000, you’ll have to pay CGT. If it’s under £6,000, then don’t worry about it.
From April 2024, the CGT allowance will be cut to £3,000.
The CGT you pay is based on rates set by HMRC.
Understanding Capital Gains Tax
If you earn a profit of over £6,000 in gold, the amount of CGT you’ll have to pay will depend on how much you earn and the income tax bracket you fall into. There are three main tax brackets in the UK: basic, higher and additional.
Which bracket you sit in depends on how much you earn. Here is how CGT rates apply based on your tax bracket:
- Basic rate taxpayer:
- Earnings: £12,571 to £50,270
- CGT rate on assets: 10%
- Higher rate taxpayer:
- Earnings: £50,271 to £125,139
- CGT rate on assets: 20%
- Additional rate taxpayer:
- Earnings: Over £125,140
- CGT rate on assets: 20%
So, if you earn, for example, £35,000 a year, you’re classed as a basic rate taxpayer. If you then sell your gold for £6,001, you’ll pay 10% on the £1. Make sense?
If your total profit (including the sale of gold assets) in a tax year is below the personal allowance, you do not have to pay any CGT on your profits. If your total profit goes over your personal allowance, you will pay CGT on the excess.
Example Of Capital Gains Tax on gold investments
If you were to buy gold for £34,000 and sell it for £39,000, you wouldn’t be liable to pay capital gains tax as it falls within your annual allowance.
However, if you invested £102,000 in gold and sold it for £117,000, you would have made £15,000 profit. The first £6,000 of this £15,000 is within your CGT allowance - you wouldn’t pay tax on it. You’d pay CGT on the remaining £9,000 profit.
That’s why, if you live in the UK, it’s important to learn more about investment taxes. Because whether you sell your gold within the UK or overseas, as a UK resident, you may still be liable to pay CGT. However, there are things you can do to reduce the CGT you pay…
How can I sell gold without paying taxes in the UK?
There is no way to avoid paying taxes on gold profits over your allowance.
However, you can be tax-efficient when you come to sell your gold to minimise the capital gains tax you pay. A few useful tips include:
- Keeping your annual profits below or close to your personal allowance. Simply only sell up to £6,000 in profit each year.
- Buying gold coins that are legal tender in the UK, that way you’re not subject to tax.
Ready to begin your journey?
If you're looking to begin investing in gold bullion, GOLD AVENUE offers a selection of gold bars and coins of the highest calibre, at leading market prices.
Based in Switzerland, buying gold with us means that all of your purchases are VAT-free. You will only need to pay CGT in the UK after selling your gold. And our gold price is so competitive that our gold is perfect for making an investment.
Below is a selection of our most popular gold bars and coins: