Platinum and palladium in the UK

The tax asymmetry that defines these two metals

Everything about owning platinum or palladium in Britain begins with a line in the VAT legislation, and with what that line leaves out. Schedule 9, Group 15 of the Value Added Tax Act 1994 exempts investment gold: bars and wafers of at least 995 fineness, and coins struck after 1800 that are of at least 900 fineness, are or have been legal tender in their country of origin and are sold for no more than 180 per cent of the value of the gold they contain.

Read the same schedule for any other metal and you find nothing. Platinum, palladium and silver are all absent from it, which makes them ordinary goods for VAT purposes: they carry the standard rate of 20 per cent on the whole purchase price, payable whether the item is a one-ounce coin, a hundred-gram bar or industrial sponge.

A private buyer is not registered for VAT on a personal purchase and therefore cannot recover the charge. It is not a timing difference or a deposit; it is money that leaves and does not come back. The exemption for investment gold is the reason a gold buyer and a platinum buyer walk out of the same shop with very different arithmetic, and the same wedge applies to VAT on silver.

What the 20 per cent does to a round trip

The tax is levied once, at purchase, and after that it plays no further part. When the metal is sold, a dealer prices the buy-back from the metal content and the state of the market, never from the invoice. Nobody reimburses the tax. In practical terms the quoted price must rise by roughly the tax, plus the dealing spread, before a private holder is back where they started.

That is a materially higher hurdle than gold faces, and it changes the sensible time horizon rather than ruling the purchase out. Short holdings in these metals are expensive by construction. The honest way to read any offer is to strip it back to the metal and then add the layers one at a time. Feed the weight and fineness into the melt value calculator to see what the item is worth as raw metal, then run the purchase price calculator to see what a dealer buying it back would plausibly pay.

The gap between those two figures, widened by the tax, is the true cost of ownership — and the guide to buying gold describes a purchase where that first 20 per cent step simply does not exist.

Capital Gains Tax without a holding period

On disposal, a gain on physical platinum or palladium falls under the Taxation of Chargeable Gains Act 1992. The rates are 18 per cent to the extent the gain sits within the basic rate band of £37,700 and 24 per cent above it, unchanged for the tax year running from 6 April 2026 to 5 April 2027. Before those rates apply, the Annual Exempt Amount of £3,000 is deducted. It is an allowance in the proper sense, taken off the gain, not a threshold that switches tax on and off once breached.

The point that most often surprises readers who have used continental European guidance is what is missing. There is no holding period in the United Kingdom. A gain realised a fortnight after purchase and one realised after twenty years attract exactly the same treatment. The holding period that releases private metal gains from tax in Germany and several other jurisdictions has no British equivalent, and no amount of patience creates one.

Nor is there a wrapper to hide in. Physical metal cannot go into an ISA, and a SIPP may hold only gold bars or wafers of at least 995 fineness through the scheme administrator. The tax calculator models the country rules, and the guide to precious metals and tax works through the British position in detail.

No platinum or palladium coin is named CGT-free

Britain has a genuine peculiarity that saves some gold investors a great deal of tax, and it is important to understand why it does not extend here. Section 21(1)(b) of the Taxation of Chargeable Gains Act 1992 provides that sterling is not a chargeable asset. Because British bullion coins are legal tender under section 2(1) of the Coinage Act 1971, a gain on them falls outside Capital Gains Tax altogether.

HMRC sets out which coins it accepts on that footing in its Capital Gains Manual at CG78305. Two are named: the Sovereign of 1837 and later, and the gold Britannia. The same passage treats the Krugerrand as a chargeable asset, and foreign issues such as the Maple Leaf follow it.

No British platinum or palladium bullion coin appears on that list. General statements from the mint about its bullion range being free of Capital Gains Tax are not an HMRC confirmation and should not be treated as one. Anyone buying a platinum coin or a palladium coin should assume the gain is chargeable, and should note that the same coin also carries 20 per cent VAT going in.

Bars, chattels and marginal relief

There is a second relief, less famous and more widely useful for these metals. Section 262 of the Taxation of Chargeable Gains Act 1992 exempts a gain where tangible movable property — a chattel — is disposed of for £6,000 or less. Immediately above that figure, marginal relief limits the tax to five thirds of the amount by which the proceeds exceed £6,000, which prevents a sale at £6,100 from being punished relative to one at £5,900.

Bars qualify as chattels, and so does an item of platinum jewellery. That gives a holder of modest-sized bars a real planning tool, particularly when disposals are spread across tax years alongside the Annual Exempt Amount.

Two limits deserve attention. Section 262(6) disapplies the rule for currency, so foreign bullion coins get no £6,000 cushion at all and the gain is chargeable from the first pound. And the set rule treats items forming a set, sold to the same person or to connected persons, as one disposal: selling ten identical bars piecemeal to the same buyer does not multiply the limit by ten. Keeping invoices, weights and dates from the outset is what makes any of this provable later.

When a disposal has to be reported

Reporting is triggered in two separate ways, and the second catches people out. Self Assessment is required if the gain exceeds the Annual Exempt Amount, and also if total proceeds exceed £50,000 in the tax year, even where the gain sits comfortably below the allowance. Proceeds, not profit: a holder selling a large position at a small gain still has a filing obligation.

Someone not otherwise within Self Assessment can use HMRC's real-time Capital Gains Tax service instead, which reports and pays the tax on a single disposal without pulling the taxpayer into an annual return.

The deadlines follow the ordinary Self Assessment calendar: 31 October for a paper return and 31 January for an online one, after the end of the tax year. Losses are allowable against gains and can be carried forward, but generally have to be claimed within four years of the end of the tax year in which they arose, so a bad sale is worth reporting even when no tax is due. Nothing here is tax advice.

How London sets the reference price

London is the home market for these metals as much as for gold. The LBMA Platinum Price and the LBMA Palladium Price are established twice on every trading day, at 09:45 and 14:00 London time, in an electronic auction quoted in US dollars per troy ounce. Two settings a day matches gold and doubles what silver gets.

The heritage is the London Platinum and Palladium Market, whose name still attaches to the good delivery specifications for plate, ingot and sponge. The auctions are run today by ICE Benchmark Administration, and both are regulated benchmarks supervised by the Financial Conduct Authority. That is the only point at which a British regulator touches this market at all: the number is supervised, the trade in the metal is not.

Between auctions, price formation continues in the over-the-counter spot market and on the exchanges, where the futures market does much of the short-term work. Arbitrage keeps the three tied together, though a benchmark and a live quote are not the same thing. One term worth clearing up before it misleads anyone is Good Delivery: it is a wholesale specification for large bars, not a retail quality label. Live quotes sit on the platinum price page and the palladium price page.

Dollars per ounce against a moving pound

Neither metal is quoted in pounds anywhere that matters. The auction produces a dollar figure per troy ounce of 31.1035 grams, and every sterling price a British buyer sees is that figure converted. A holder in Britain therefore runs two positions at once: the metal and the exchange rate.

The interaction is easy to state and easy to forget. If the dollar quote falls while the pound weakens against the dollar by more, the sterling price rises even though the metal got cheaper. Run it the other way and a strong pound quietly eats a dollar rally. Over multi-year holdings the currency contribution is not a rounding error, and it is entirely outside the industrial story that drives the dollar price. The pair can be followed on the exchange rates page.

A second conversion trips people up: the market quotes ounces, British dealers sell grams and kilogrammes. The unit converter handles that arithmetic, and long series in sterling sit on the historical prices page, where the currency effect becomes visible rather than theoretical.

Precious in name, industrial in practice

The platinum group metals are six chemically related elements: platinum, palladium, rhodium, ruthenium, iridium and osmium. For an investor only the first two count, because only they are struck into coins and poured into investment bars in any quantity. Rhodium is a genuinely traded metal with famously extreme price swings, but there is no meaningful retail market and no liquid public reference auction behind it. The remaining three are industrial materials.

What separates the two investable ones from gold is not scarcity — both are rarer in the ground — but what happens to them next. A gold bar is acquired in order to exist. Platinum and palladium are acquired in order to disappear into something else: a washcoat on a ceramic honeycomb, a catalyst bed in a chemical plant, a bushing in a glass furnace, a probe in a hospital. Investors are a minority customer in a market run for manufacturers.

No central bank holds either metal as a reserve asset, which removes the large, price-insensitive, permanent buyer that underpins gold. The consequence is that they behave pro-cyclically. A recession can push them down at precisely the moment a holder expects a precious metal to rise, and the historical record does not support treating them as a safe haven. For contrast, the gold price page tracks a market where supply and demand operate on entirely different terms.

Catalytic converters and the split between the two

A vehicle exhaust catalytic converter consumes more of both metals than every other application combined. The metal sits as a thin coating on a ceramic honeycomb, and the harmful products of combustion are oxidised or reduced as the exhaust gas passes over it. Nothing outside the platinum group does that job at acceptable cost, which is why the driving force in these markets for four decades has been emissions regulation rather than anything an investor did.

Chemistry and engine type then divide the work:

Palladium carries by far the greater concentration risk. Petrol exhaust systems account for the bulk of what it is used for, which turns its price into something close to a geared position on world light vehicle output and on the tightness of emissions limits. Platinum's demand base is wider — diesel after-treatment still matters, but so do wedding rings, refinery catalysts, the bushings that draw molten glass into fibre, and a long tail of medical and laboratory equipment. That breadth is the main reason platinum has historically been the calmer of the two.

Hydrogen: the demand story unique to platinum

One demand channel belongs to platinum alone, and it runs in both directions of the hydrogen economy. Splitting water in a proton-exchange-membrane electrolyser needs platinum on the electrode; turning that hydrogen back into electricity in a fuel cell, under the floor of a lorry or in a stationary generator, needs it again. At industrial scale that would add a block of platinum demand with no relationship to the combustion engine.

Treat it as a scenario rather than a fact on the ground. Two things have to happen and neither is settled: enough capacity has to be built, and the platinum content of each cell has to stay high enough to matter — which is precisely what manufacturers are working to reduce, the metal being among the dearer components in the stack. Published projections span a wide range for that reason.

The part that can be stated without speculating is the shape of the exposure, which is lopsided. Platinum has a plausible non-automotive growth channel capable of partly offsetting the long decline of the diesel catalyst. Palladium has nothing equivalent to fall back on. The same move towards battery-electric drivetrains that could eventually create platinum demand simply subtracts palladium demand, because a car without an engine has no exhaust to clean.

Substitution ties the two prices together

Sitting next to each other in the periodic table, the two metals behave similarly enough that a catalyst designer can shift part of the load from one to the other. Nothing theoretical about it: when a persistent price gap opens up, the washcoat formulation is reworked to lean on whichever metal is cheaper, and the revised recipe reaches showrooms with the next generation of vehicle platforms.

Both directions of that trade have been observed over the past few decades, according to which metal happened to be the dearer at the time. That has two implications for anyone holding either of them. The first is that an extreme valuation gap between the two rarely lasts forever, because the gap is itself the incentive that closes it. Substitution works as a negative feedback loop wired into the market, which also means a portfolio holding both metals is less diversified than the two names on the invoice suggest.

The second implication is a warning about timing. Reformulating and re-certifying a catalyst takes years, not weeks, so a wide gap can persist for a very long stretch before anything moves. Substitution is a long-run anchor, never a short-term trading signal. Readers who follow the gold-silver ratio will recognise the shape of the argument, though that pair has no comparable industrial feedback behind it.

Supply concentrated in two countries

Very few traded commodities depend on so few places. Most mined platinum comes out of South Africa. Most mined palladium comes out of Russia and South Africa between them, with Zimbabwe, Canada and the United States making up the remainder. Two countries, in practice, decide how much of either metal the world can have in a given year.

That arrangement is fragile in a specific way. Industrial action across the South African platinum belt, load shedding by the national electricity supplier, an accident that closes a shaft, or a shift in the sanctions position on Russian metal will each take a visible share of global output offline within days rather than quarters. Events in all four categories have moved these prices sharply in living memory, and none of them is forecastable.

The second problem is geological. Platinum group metals mostly arrive as a by-product, alongside nickel and copper or from deep reef operations whose viability rests on a basket of metals. A mine planned around nickel will not lift its palladium output because palladium has become expensive; the ore body dictates the mix, and new capacity is a matter of years and a great deal of capital. Supply that cannot flex, meeting demand that swings with the economic cycle, produces the price behaviour described below.

Recycling from scrapped cars and spent catalysts

Secondary supply carries far more weight here than in most metal markets. A converter taken off a scrapped car is cut open, the honeycomb inside milled and smelted, and the platinum group content pulled back out at a recovery rate good enough to make the exercise commercial. Add the residues that chemical plants and electronics manufacturers return for reprocessing and the total is a serious fraction of annual availability, which is why precious metal recycling belongs in the supply picture rather than in a footnote to it.

Recycled supply behaves nothing like mine supply. It reacts to price within months rather than years: a strong quote lifts collection rates, breakers bid harder for converters, and metal that had been sitting in a yard comes forward. It also runs on the vehicle scrappage cycle, so a weak period for new-car sales reappears as thinner recycled supply a decade later, when those cars fail to reach a breaker's yard.

There is a less agreeable corollary. High prices have made converter theft a recurring problem in Britain, the direct consequence of dispersing valuable metal in small quantities across the physical economy. The same refinery infrastructure that handles spent catalysts also pours the investment bars, by an identical process whatever the feedstock.

A market small enough to move on one order

Neither market is large. Set the annual value of platinum or palladium against gold and the difference is an order of magnitude, and the slice actually available to investors is narrower again. A private buyer meets the consequences in three places.

The first is volatility. Order flow that the gold market would absorb without a flicker can move a platinum or palladium quote noticeably, and palladium is routinely among the most volatile metals traded anywhere. The second is the spread between what is paid on the way in and received on the way out. It is wider than for gold, and the reason is not greed: a dealer holding stock in a market that can gap overnight carries a real risk while waiting to lay the position off, and prices it in.

The third is the premium charged over metal value on small coins and bars. Production runs are shorter than in gold, so the fixed costs of minting, certifying and distributing each item are recovered from fewer pieces. Put the 20 per cent VAT on top of that premium and a physical round trip starts a long way underwater. British coverage is thinner too: a modest number of firms quote a two-way price in platinum, and fewer again in palladium.

Fineness, hallmarking and the four assay offices

Investment platinum and palladium are conventionally refined to a fineness of 999.5, which is the figure stamped on bars and quoted for coins. That is the working standard for the trade, and anything materially below it belongs to the jewellery or industrial world rather than the investment one.

British hallmarking law surprises people who expect a government mark on anything precious. The Hallmarking Act 1973 exempts bullion bars and current or formerly current coins from compulsory marking, so an investment bar legitimately carries no hallmark at all. Its absence is the law working as intended, not a sign of a problem. Where the Act does apply, the weight thresholds differ by metal: marking is compulsory from 0.5 grams for platinum and 1.0 gram for palladium, against 1.0 gram for gold and 7.78 grams for silver — the tightest threshold of the four applies to platinum.

Marking itself is carried out by the four assay offices at London, Birmingham, Sheffield and Edinburgh. For unmarked investment metal the substitutes are the manufacturer's assay documentation and the physical specifications of the item. Because standard issues have defined dimensions, checking diameter, thickness and weight against published figures excludes most fakes, and the coin authenticity checker holds the target values. What makes the check work is density: palladium is far lighter than gold, platinum noticeably heavier, so a counterfeit of the wrong metal betrays itself on the scales.

No FSCS behind a bullion purchase

This is the second British point that has no continental parallel, and it belongs alongside the tax. Buying, holding and selling physical metal is not a regulated activity. There is no Financial Conduct Authority rulebook governing a bullion dealer, no FSCS protection if that dealer fails with your money or your metal, and no access to the Financial Ombudsman Service when something goes wrong. The auction that prices the metal is supervised; the transaction is not.

What applies instead is ordinary consumer law. The Consumer Rights Act 2015 requires goods to be of satisfactory quality, as described and fit for purpose, and gives a thirty-day right to reject goods that are not. That is a real protection against misdescription and against a bar that is not what the invoice says.

One protection that buyers routinely assume they have is absent. The fourteen-day cancellation right under the Consumer Contracts Regulations 2013 does not apply, because regulation 28(1)(a) disapplies it for goods whose price depends on fluctuations in the financial market that the trader cannot control. Metal is the textbook case. Goods bought at auction are excluded separately. Practical due diligence therefore falls on the buyer: company records, trading history, clear written terms. The guide to buying gold and the guide to buying silver set out the checks in full.

Storage, resale and an honest closing word

Both metals are dense, so the bulk problem that makes a serious silver holding awkward does not arise. Two points are worth flagging. Standard contents insurance frequently does not cover a bullion holding — The Royal Mint says as much in its own guidance — and many policies apply valuables sub-limits well below the value of a modest position, so the insurer needs telling before rather than after. Where a safe is used, insurers work from the European standards for burglary resistance and security cabinets. The guide to storing and insuring covers the detail, including why the Financial Services Compensation Scheme has nothing to say about the contents of a safe deposit box.

What actually needs planning, though, is not storage but the exit. Fewer British firms make a two-way market in these metals than in gold, buy-back quotes can be noticeably wider, and there are periods when a dealer would simply rather not take the stock. Selling is generally slower and dearer than with a Sovereign, and that should be assumed at the point of purchase rather than discovered later. Burying metal, incidentally, solves none of this and creates fresh problems of its own, as the guide to burying precious metals explains.

The closing point is one of category. Platinum and palladium are cyclical industrial metals that happen to be precious, not monetary metals in smaller packaging. Their prices answer to vehicle production, emissions rules and whether a few mines are running, they carry 20 per cent VAT on the way in and Capital Gains Tax with no holding period on the way out, and they sit outside the investor protection regime entirely. That is a description, not a recommendation, and nothing here is a forecast. The remaining terminology is collected in the glossary, and the two larger markets are covered in the guides on understanding the gold price and understanding the silver price.