How to Invest in Gold in the UK: The CGT Trick That Beats Bars and ETFs

Gold coins produced by The Royal Mint that are UK legal tender — Gold Britannias, gold Sovereigns, and the Lunar/Queen's Beast series struck as legal tender — are completely exempt from Capital Gains Tax. Not exempt up to an allowance. Exempt without limit, because HMRC treats UK currency disposals as outside the scope of CGT.

This matters more every year. The CGT annual exempt amount has been cut to just £3,000 for 2026/27, down from £12,300 three years ago. Gains above it are taxed at 18% for basic-rate payers and 24% for higher-rate payers. A gold bar or a South African Krugerrand is a chargeable asset like any other. A Sovereign is not.

Work a realistic number. You buy gold, hold it, and sell years later with a £20,000 gain. After the £3,000 allowance, £17,000 is taxable.

Same metal. Same gain. Up to £4,080 difference, decided entirely by which coin you picked at purchase. For a buy-and-hold UK investor outside a tax wrapper, there is rarely a good reason to choose anything other than CGT-exempt coins.

Investment-grade gold is exempt from VAT in the UK under the gold special accounting scheme. That covers bars and coins of at least 995 thousandths fineness, and gold coins minted after 1800 that are or have been legal tender. You do not pay 20% to buy it.

Silver, platinum and palladium get no such treatment. Physical silver carries 20% VAT on purchase. That is an instant 20% hole you must climb out of before you break even — which is why "silver is cheaper than gold" is a beginner's trap for UK buyers. The metal is cheaper; the tax is not. If you want precious-metals exposure as a small portfolio hedge rather than a collection, gold is structurally the cleaner UK asset, and the comparison against income assets is unforgiving — see why FTSE 100 dividends crush the shiny metal before you commit a large slice.

There are three sensible routes for a UK investor, and they are taxed and priced very differently.

Physical coins. Sovereigns and Britannias from The Royal Mint or an established dealer. VAT-free, CGT-free, no counterparty risk, no annual fee. The cost is the spread: you typically buy a few per cent above spot and sell a little below it. At a quoted £3,407 spot ounce that round-trip friction is the real fee, not a headline charge. Insured storage or a home safe is your problem.

Gold ETCs (exchange-traded commodities). Physically-backed products such as iShares Physical Gold or Invesco Physical Gold trade like a share with an ongoing charge around 0.12%–0.25%. They can be held inside a Stocks and Shares ISA or a SIPP, where gains are sheltered entirely — which neutralises the coin-versus-bar CGT question. Outside a wrapper they are chargeable for CGT with no legal-tender exemption.

SIPP gold. HMRC permits physical investment-grade gold bullion (minimum 995 fineness, from an LBMA-approved refiner) inside a Self-Invested Personal Pension. Gains grow tax-free and you got tax relief on the way in, but the gold must be held by the scheme, not at home, and not every SIPP provider offers it.

Note what is missing: you cannot hold physical gold coins or bars directly in an ISA. Only gold ETCs and gold-mining equities qualify for the ISA wrapper. If tax shelter is the priority, the wrapper decides the route — for a detailed pound-for-pound breakdown of spreads, storage, and ongoing charges, see our gold ETFs vs physical bullion cost comparison. — see our Stocks and Shares ISA guide and the wider investing hub for how this sits in a portfolio.

The structure is only half the decision. The other half is opportunity cost, and in 2026 it is large. Gold produces no income. While you hold it, a UK government bond pays you to wait: the 10-year gilt yield climbed to 4.82% in April 2026.

Every year you hold gold instead of gilts, you forgo roughly 4.8% of guaranteed nominal return for the chance of a capital gain that may not arrive — gold fell 3.7% in the week to 15 May 2026 alone. That is the case for treating gold as portfolio insurance sized at 5–10%, not as a core holding. For the income alternative, read how UK investors should actually buy gilts, and for the contrarian counter-argument see the case for gold. The point of this guide is narrower: if you do buy gold, the wrapper decides how much of the gain you keep.

Before you buy anything:

• Default to CGT-exempt coins (Sovereigns, Britannias) for any holding outside a tax wrapper. The exemption is the edge.
• Buy from The Royal Mint or an LBMA-linked dealer. Compare the buy-back spread, not just the buy price — that round trip is your true cost.
• Avoid physical silver unless you accept the 20% VAT drag from day one.
• Use an ISA or SIPP if you want gold exposure without the coin-versus-bar tax puzzle — buy a low-cost physical gold ETC inside the wrapper.
• Size it as insurance. A 5–10% allocation hedges; a large allocation is a bet against 4.8% risk-free gilts and the FTSE's dividend stream.
• Keep evidence. Even for exempt coins, keep purchase records — HMRC expects you to show why a disposal was exempt.

FCA note: this is general information, not personal advice. Gold can fall sharply — it did the week this was written — and past performance is no guide to the future.