Tax-Free Allowance (Capital Gain)

Anyone who sells physical precious metal — gold, silver, platinum or palladium — at a profit inevitably asks: do I have to pay tax on this? In the United Kingdom the answer depends on two factors: the type of coin or bar being sold, and the annual exempt amount for Capital Gains Tax (CGT). The allowance exists so that small gains do not trigger disproportionate tax administration.

Legal Basis

Profits from selling physical precious metals may fall under Capital Gains Tax in accordance with the Taxation of Chargeable Gains Act 1992. Unlike Germany, the UK has no one-year speculation period – there is no holding period after which gains become automatically tax-free.

However, there is an important exemption: UK legal-tender coins from The Royal Mint — such as the Sovereign, Britannia, Lunar and Queen's Beasts — are CGT-exempt with unlimited gains because they are recognised as legal tender. By contrast, non-legal-tender coins and gold bars are subject to CGT on gains above the annual exempt amount.

Important: The annual exempt amount is a genuine allowance applied to the total of net chargeable gains in a tax year. If your total gains stay within it, no CGT is due; only the amount above it is taxed.

How the Annual Exempt Amount Works

Each individual has an annual exempt amount (the CGT allowance). Only the total net chargeable gains above this amount, across all disposals in the tax year, are subject to CGT. Because HMRC adjusts the exact figure from time to time, always check the current allowance on gov.uk.

Calculating the Chargeable Gain

The taxable gain is calculated as follows:

Chargeable gain = disposal proceeds - acquisition cost - allowable costs

The acquisition cost includes the purchase price plus incidental costs (postage, insurance, premium/agio). Certain allowable costs of buying and selling may also be deducted. Where several tranches were bought, a consistent matching method such as the FIFO principle (First In, First Out) determines which acquisition cost applies.

Worked Example

1. Purchase of 50 g of gold in March 2025 for £3,500 (incl. incidental costs).
2. Sale in September 2025 for £4,100.
3. Gain: £600 — if this is your only gain and it stays within the annual exempt amount → no CGT.
4. If total net gains for the year exceed the allowance, only the excess is taxed at the applicable CGT rate.

The current gold price and the price trend via the historical chart can help you choose the right time to sell. The Tax Estimator also provides a projection.

Special Cases and Common Mistakes

• Legal-tender coins: Sovereigns and Britannias are CGT-exempt without limit – a key planning advantage over bars.
• Loss relief: Allowable capital losses can generally be set against capital gains of the same or later tax years, subject to HMRC rules.
• Multiple positions: Anyone selling both gold and silver in the same year must combine all chargeable gains and losses before comparing the net figure with the annual exempt amount.
• Record-keeping: Purchase receipts, invoices and bank statements should be retained in line with HMRC guidance.

In Brief

The annual exempt amount protects smaller precious-metal gains from Capital Gains Tax, and Royal Mint legal-tender coins are CGT-free without limit. Anyone holding larger positions or trading regularly should document purchase and sale data carefully and seek professional advice where necessary. This article does not replace individual tax advice.