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 2000, European countries applied different VAT (Value Added Tax) regimes on gold sales. While some EU states imposed little or no VAT on gold, the United Kingdom applied the standard VAT rate to gold bullion purchases. As a result, the UK market was at a competitive disadvantage compared to other EU countries where gold could be acquired with lower or no VAT.
VAT changes from 2000
Effective 1 January 2000, investment gold became exempt from VAT in the UK. This change aligned the UK’s approach with EU standards and allowed investment gold to be treated similarly to other financial assets, such as stocks and shares.
The exemption covers:
- Gold bars and gold bullion coins sold at a premium of less than 180% over their intrinsic metal value.
- Most modern bullion coins, including notable examples like the Sovereign and the Krugerrand, fall within this definition and are therefore VAT-free in the UK.
Legal Framework
These rules are based on:
- VAT Notice 701/21A (investment gold guidance issued by HMRC)
- EC Council Directive 98/80/EC, which aimed to harmonize VAT treatment of investment gold across EU member states
The legislation established a level playing field for investment gold sales within the European Union and removed the UK’s previous market disadvantage.
What is “Investment Gold”?
The UK Government’s website classes investment gold as :
- Gold of purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets.
- A gold coin minted after 1800 with the following features:
- a purity of not less than 900 thousandths
- has been, legal tender in its country of origin
- sold at a price not greater than 180 % of the value of its fine gold content
- An investment gold coin as specified in Notice 701 / 21 A Investment gold coins.
A list of qualifying gold coins is published by the European Commission in December each year to ensure consistency across the EU. The UK duplicates this in Notice 701/21A, alongside an additional list of gold coins accepted by the UK as qualifying for exemption.
VAT on Silver
Silver bullion is subject to a 20% Value Added Tax (VAT). This means that, as an investor, the price of silver must increase by more than 20% for you to realize a profit after accounting for the VAT. It is generally advisable to consider purchasing silver when its price is relatively low compared to gold, as this can potentially maximize your returns.
VAT for Businesses – If you are purchasing silver as a professional business and are eligible to reclaim VAT, this tax will not affect your overall profit margin.
Before proceeding with a purchase for VAT reclaim purposes, it is strongly recommended to consult with a qualified accountant or tax advisor.
Please note: Gerrards cannot provide any guarantee regarding your eligibility to reclaim VAT on silver purchases. Always seek professional advice prior to making investment decisions.
