VAT on Gold and Silver Investments

When investing in bullion, it is important to understand the VAT implications associated with your purchase. A frequently asked question is: "Do I have to pay VAT on my bullion investment?" For silver, the answer is yes—VAT applies. However, for gold, the situation is different: investment gold is exempt from VAT. This exemption is one of the primary reasons many investors choose gold over silver.

VAT on Gold

Background

Prior to the year 2000, the UK applied standard VAT to gold bullion purchases. Meanwhile, other EU member states applied little or no VAT to gold. This placed the UK at a competitive disadvantage in the bullion market.

VAT Changes from 2000

Effective 1 January 2000, investment gold became VAT exempt in the UK. This change aligned the UK with other EU standards and allowed investment gold to be treated like other financial assets such as stocks and shares.

The exemption covers:

• Gold bars and wafers of a purity not less than 995 thousandths
• Gold coins minted after 1800, of a purity not less than 900 thousandths, which are or have been legal tender in their country of origin, and are sold at a price not exceeding 180% of the open market value of the gold contained in the coin

Modern bullion coins such as the Gold Sovereign and Krugerrand are therefore VAT-free.

Legal Framework

For detailed guidance on investment gold VAT exemption, see:

• HMRC VAT Notice 701/21A (investment gold guidance)
• EC Council Directive 98/80/EC (EU harmonization)

What is "Investment Gold"?

The UK Government defines investment gold as:

1. Gold of a purity not less than 995 thousandths that is in the form of a bar or wafer, of a weight accepted by the bullion markets
2. A gold coin which was minted after 1800, is of a purity of not less than 900 thousandths, is or has been legal tender in its country of origin, and is of a description of coin that is sold at a price that does not exceed 180% of the open market value of the gold contained in the coin
3. Any other gold coin specified in Notice 701/21A

The European Commission publishes a list of qualifying coins each December, which the UK duplicates in Notice 701/21A along with additional UK-accepted coins.

VAT on Silver

Unlike gold, silver bullion is subject to 20% VAT in the UK. This means the price of silver must increase by more than 20% before an investor can realise a profit.

Our advice: Consider buying silver when the price is relatively low compared to gold, to maximise your investment potential despite the VAT burden.

VAT for Businesses

Professional businesses may be eligible to reclaim VAT on silver purchases. We recommend consulting with your accountant or tax advisor to determine your eligibility. Gerrards cannot guarantee VAT reclaim eligibility for any customer.