What Is CGT-Free Gold? A Guide for UK Investors
Certain UK gold coins are exempt from Capital Gains Tax. How the exemption works, which coins qualify, and what it means for the way you buy.
“CGT-free gold” is a phrase used often, and not always precisely. It refers to gold coins that are exempt from Capital Gains Tax because they are UK legal tender. This guide sets out how the exemption works, which coins qualify, and what it means for the way you buy.
Capital Gains Tax in brief
Capital Gains Tax is charged on the profit you make when you sell, or otherwise dispose of, an asset that has risen in value. Each individual has an annual exempt amount: the gains you can make in a tax year before any tax is due. That allowance has fallen sharply, from £12,300 in the 2022–23 tax year to £6,000, and then to £3,000 from April 2024. Gains above it are taxed at 18% or 24%, depending on your income.
For anyone holding assets that have grown in value, the smaller allowance means more of each gain is now taxable.
Why some gold coins are exempt
The exemption comes from Section 21(1)(b) of the Taxation of Chargeable Gains Act 1992, often written TCGA92/S21(1)(b). It treats foreign currency as a chargeable asset, but not sterling. Gold Sovereigns and Britannias are struck by The Royal Mint as UK legal tender, so for tax purposes they are sterling currency, and a gain made on selling them is not a chargeable gain.
There is no upper limit to the exemption, and it does not depend on how long you have held the coins. Nor does it matter that a coin’s gold is worth far more than its face value.
A worked example
Suppose you invest £50,000 in gold and, some years later, sell it for £100,000: a gain of £50,000.
Gold bars
After the £3,000 annual exempt amount, £47,000 is taxable at 24%.
£11,280 tax
Sovereigns or Britannias
The gain is not chargeable, however large it is.
£0 tax
The example assumes a higher-rate taxpayer with no other gains in the year; a basic-rate taxpayer may pay 18% on part of the gain. The principle holds at any size: the larger the gain, the larger the difference.
Which coins qualify
The exemption applies to gold coins that are UK legal tender. For investors, that principally means:
- Gold Sovereigns — full, half and quarter Sovereigns, as well as double and five-pound Sovereigns.
- Gold Britannias — one ounce, and half, quarter and tenth of an ounce.
- Other Royal Mint bullion coins issued as UK legal tender, such as The Queen’s Beasts series.
Gold coins that are currency in other countries are treated differently. The South African Krugerrand, the Canadian Maple Leaf and the American Eagle are foreign currency for this purpose, so gains on them are taxable in the same way as gains on bars.
How this shapes a buying strategy
For a UK taxpayer, the exemption changes the comparison between coins and bars. Bars usually cost slightly less per gram to buy, but a gain on them is taxable when you sell; coins cost a little more but let you keep the whole of the gain. Over a long holding period, the tax saved on a substantial gain can comfortably exceed the difference in premium.
Two practical points are worth keeping in mind. First, keep records of what you bought, when and for how much. Second, the exemption concerns Capital Gains Tax only: gold coins form part of your estate for Inheritance Tax in the same way as other assets.
Tax should never be the only reason to buy an asset, but it is a legitimate reason to prefer one form of gold over another. In a consultation, we can explain which coins qualify and how they might fit your plans, and you can take independent tax advice on your own circumstances.
Tax note: Tax treatment depends on individual circumstances and legislation may change. Northern Gold Supply does not provide tax advice. Clients should seek independent professional advice where required.