Gold vs silver bars and coins: which is better for tax?
When people weigh up gold against silver, tax is often the deciding factor they overlook. In the UK two taxes matter: VAT when you buy, and Capital Gains Tax (CGT) when you sell at a profit. The neat thing is that the metal you choose decides the VAT, and the format, bar or coin, largely decides the CGT. Here is how gold bars, gold coins, silver bars and silver coins actually compare.
VAT: gold wins outright
Investment gold, both bars and coins, is completely free of VAT in the UK. Silver is not. Physical silver bars and silver coins both carry VAT at 20%, whatever the country of issue and even for a Silver Britannia. This is the single biggest tax difference between the two metals. That 20% is added to your price on day one, so a silver holding has to rise by more than 20% just to match where a VAT-free equivalent started. For a buy-and-hold investor, VAT alone makes gold far cheaper to get into.
CGT: the format matters, not the metal
Capital Gains Tax works the other way round: it does not care whether you hold gold or silver, only whether the item is UK legal tender. Coins that are legal tender of the realm, the gold Sovereign and Britannia and the Silver Britannia, are completely exempt from CGT, with no limit on the tax-free gain. Bars (gold or silver) and non-legal-tender coins such as the Krugerrand, Maple Leaf or American Eagle are chargeable assets: gains above your annual allowance (£3,000 for 2026/27) are taxed at 18% or 24% depending on your income. So a legal-tender coin beats a bar of the same metal for CGT, every time.
The four options, ranked for tax
| Format | VAT-free to buy? | CGT-free to sell? |
|---|---|---|
| Gold coins (Britannia, Sovereign) | ✓ | ✓ |
| Gold bars | ✓ | ✗ |
| Silver coins (Silver Britannia) | ✗ | ✓ |
| Silver bars | ✗ | ✗ |
Gold coins (Britannia, Sovereign) are the most tax-efficient physical metal a UK investor can own: no VAT going in, no CGT coming out. Gold bars come next, still VAT-free, but any gain is potentially subject to CGT. Silver coins (Silver Britannia) are CGT-free like their gold cousins, but you still pay 20% VAT to buy them. Silver bars are the least tax-friendly of all: 20% VAT on the way in and CGT on the way out.
Ways to soften silver's VAT
There are legitimate ways to reduce the VAT sting on silver. Pre-owned silver sold under a dealer "margin scheme" is taxed only on the dealer's margin rather than the full price, so it usually shows no separate VAT and is often the cheapest way in. Alternatively, silver bought and kept in a customs-bonded vault outside the UK, for example in Zurich or Singapore, attracts no VAT while it stays there, the trade-off being that you never take the metal home. Both routes carry their own costs and conditions, so weigh them carefully.
The bottom line
Purely on tax, gold is the clear winner, and gold legal-tender coins most of all: no VAT, no CGT. Silver's 20% VAT is a real headwind that gold simply does not have. That said, tax is not the whole story. Silver is far cheaper per coin, tends to be more volatile (bigger swings up as well as down), and has heavy industrial demand. If your decision is driven by tax efficiency, gold coins are very hard to beat. If you want silver anyway, a legal-tender Silver Britannia or margin-scheme silver at least keeps the tax as low as it can go.
This is general information, not tax advice. Rules, rates and allowances change and depend on your circumstances, so check the current position with HMRC or a qualified adviser before buying or selling.