Private Sale Transaction
Also: Chargeable disposal, Capital gain, Disposal for CGT
A private sale transaction occurs when a private individual disposes of an asset – including physical precious metals – at a gain; in the United Kingdom such gains may be subject to Capital Gains Tax.
A private sale transaction – in UK terms a chargeable disposal for Capital Gains Tax (CGT) purposes – captures gains that private individuals make when disposing of certain assets. It is relevant to every precious metals investor who buys and later sells physical gold, silver or other metals.
Basic principle: the gain, not the holding period
Under UK law there is no one-year speculation period as in German tax law. Instead, Capital Gains Tax may apply whenever an asset is disposed of at a gain, regardless of how long it has been held. What matters is the size of the gain and the type of asset.
| Situation | Tax consequence |
|---|---|
| Disposal of a gold bar or non-legal-tender coin at a gain | Potentially chargeable to CGT above the annual exempt amount |
| Disposal of a UK legal-tender coin from The Royal Mint | CGT-exempt (unlimited gains) |
| Loss on a chargeable asset | May be offset against other chargeable gains |
The disposal date is the date on which beneficial ownership passes – usually the date of the sale contract, not the date of delivery or payment.
What counts as a chargeable gain?
The taxable gain is calculated, in simplified terms, as:
Chargeable gain = disposal proceeds − acquisition cost − allowable costs
The acquisition cost includes not only the purchase price but also direct incidental costs such as shipping, transport insurance premiums or bank charges for the acquisition. Allowable costs may include, for example, dealing costs and other expenses wholly attributable to the acquisition or disposal.
Where several tranches of the same metal were bought at different times, HMRC's share-pooling and identification rules apply to determine which units are treated as disposed of. This can matter when working out the acquisition cost of a particular holding. More on this in the entry FIFO principle in precious metal sales.
CGT-exempt UK legal-tender coins
A key UK feature: coins that are legal tender in the United Kingdom and issued by The Royal Mint – such as the Sovereign, Britannia, Lunar and Queen's Beasts – are exempt from Capital Gains Tax, with unlimited gains. This is because they are UK currency. Foreign coins, non-legal-tender coins and gold, silver, platinum or palladium bars, by contrast, are subject to CGT on gains above the annual exempt amount.
The annual exempt amount
Gains from disposals remain tax-free overall if the total chargeable gains in a tax year do not exceed the annual exempt amount (the CGT allowance, set by HMRC and reviewed each year). Only gains above this allowance are chargeable, and the applicable CGT rate depends on the individual's total taxable income.
Loss relief
Allowable losses on chargeable assets may generally be offset against chargeable gains of the same or later tax years, reducing the amount subject to CGT. Losses cannot be set against ordinary income such as employment income. Specific rules and time limits apply for claiming and carrying forward losses.
Distinction from investment income
Interest and dividends are taxed as savings and investment income, not as capital gains. Gains from the sale of physical precious metals fall under the Capital Gains Tax regime instead. Further distinctions can be found under Withholding tax and precious metals.
Practical notes
- Keep purchase and sale receipts for several years (records support any HMRC enquiry).
- For an over-the-counter cash deal (cash payment without a custody account), the buyer is responsible for keeping records.
- For dealers and certain cash transactions, the UK Money Laundering Regulations impose identity-verification obligations.
- The historical precious metal prices can help reconstruct the acquisition cost if receipts are missing – but for tax purposes only verifiable evidence is accepted.
You can estimate the potential CGT effect of a disposal in advance with the tax estimator.
Note: This article is for general information and does not constitute tax or legal advice. For your individual tax situation, please consult a qualified tax adviser or accountant.
In brief
In the United Kingdom there is no German-style one-year speculation period; instead, Capital Gains Tax may apply on disposal. UK legal-tender coins from The Royal Mint are CGT-exempt, while bars and non-legal-tender coins are chargeable above the annual exempt amount. Accurate documentation of purchase and sale data is essential.