Investment Gold
Also: Investment-grade gold, VAT-exempt gold, Bullion gold
Investment gold is tax-privileged gold (bars and certain coins) whose purchase is exempt from VAT in the UK and the EU.
Investment gold is a clearly defined tax category. Across the United Kingdom and the EU, the purchase of investment gold is exempt from VAT - which makes gold particularly attractive compared with silver, platinum and palladium, where VAT is generally charged on purchase.
What counts as investment gold
In the UK the conditions are set out by HMRC (Notice 701/21A), which mirror the criteria of the EU VAT Directive 2006/112/EC on which the relief was based. Investment gold comprises:
- Gold bars and wafers with a fineness of at least 995/1000, in weights accepted by the bullion markets.
- Gold coins that have a fineness of at least 900/1000, were minted after the year 1800, are or were legal tender in their country of origin, and whose selling price does not exceed the open-market value of the gold they contain by more than 80 %.
HMRC publishes a list of coins that qualify as investment gold each year. Classics such as the Krugerrand, Maple Leaf, Vienna Philharmonic, Britannia and Sovereign appear on it reliably.
VAT-free on purchase - and on sale?
Two different taxes must be distinguished:
- VAT: No VAT is charged on the purchase of investment gold. This means you essentially pay only the spot price plus the premium.
- Capital Gains Tax (CGT) on gains: When you sell physical gold, any gain above the annual exempt amount may be subject to CGT. Crucially, gains on UK legal-tender coins from The Royal Mint (Sovereign, Britannia, Lunar, Queen's Beasts) are CGT-exempt with unlimited gains, because they are legal-tender British currency. Gold bars and non-legal-tender coins are subject to CGT above the annual exempt amount. There is no German one-year speculation period. A first estimate is provided by the Tax Calculator.
Investment gold vs. collector coins
Not every gold coin is investment gold. Numismatic collector coins, whose price lies well above the material value, fall outside the definition and can be subject to VAT. For pure wealth building, investors therefore usually reach for bar-like products and common bullion coins with a low premium.
In brief
Investment gold combines two tax advantages: VAT-free on purchase and - in the case of UK legal-tender coins from The Royal Mint - CGT-exempt on sale. Anyone who knows these rules buys the right bars and coins deliberately and avoids unnecessary charges. (This text is not tax advice; when in doubt an accountant can help.)