Gold sovereigns minted from 1837 onwards and gold Britannias are sterling currency, and sterling is not a chargeable asset for capital gains tax, so gains on them are exempt. Foreign gold coins such as Krugerrands are chargeable in full, while gold bars and coins that are no longer legal tender are chattels taxed under the £6,000 rule.
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Why are sovereigns and Britannias free of capital gains tax?
Section 21(1) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) says that all forms of property are assets for capital gains purposes, and section 21(1)(b) includes currency with the exception of sterling. A gold coin that is sterling legal tender is sterling currency, whatever its gold value, so it is outside the tax altogether.
HMRC’s Capital Gains Manual at CG78305 applies this directly: sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt because of section 21(1)(b). CG76881 makes the same point from the chattels side: coins and bank notes that are sterling currency are not chargeable assets.
The exemption does not depend on how much the coin is worth, how many are sold or how long they were held. It is not a relief that has to be claimed, and the coins do not use up any of the annual exempt amount.
What makes a coin legal tender for this purpose?
CG78305 says coins are regarded as currency only if they are legal tender at the time of their acquisition or disposal. A coin that is not legal tender is not currency at all, even if it was once money. HMRC gives pre 1837 sovereigns as the example: they are not currency, so they fall to be treated as chattels instead.
The practical question is therefore not whether the coin is gold or whether it was made by the Royal Mint, but whether it is sterling legal tender. The investor should keep evidence of exactly what was bought, including year and type, because the answer decides which of three very different regimes applies.
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How are Krugerrands and other foreign gold coins taxed?
A foreign coin that is legal tender in its country of issue is currency, but not sterling. CG78305 says coins which are currency but not sterling, for example Krugerrands, are chargeable assets. Worse, the chattels exemption does not help: section 262(6)(b) excludes currency from the chattels relief, as CG78305 and CG76881 both confirm.
So every pound of gain on a Krugerrand, a Maple Leaf or any other foreign legal tender coin is a chargeable gain, even on a single coin sold for a few hundred pounds. The gain is worked out in sterling: CG78310 explains that where assets are bought or sold for foreign currency, the sterling value at the date of each transaction is used. For a Krugerrand bought and sold for pounds, that simply means sterling cost and sterling proceeds.
How are gold bars and other bullion taxed?
A gold bar is tangible moveable property, which CG76550 describes as the definition of a chattel. Gold does not have a predictable life of 50 years or less, so the wasting chattels exemption does not apply, and the ordinary chattels rules in section 262 do:
- If the proceeds of a disposal are £6,000 or less, the gain is not chargeable (section 262(1)).
- Above £6,000, the chargeable gain is capped at five thirds of the excess of the proceeds over £6,000 (section 262(2)).
- For losses, proceeds below £6,000 are treated as £6,000, which restricts the allowable loss (section 262(3)).
The same rules cover coins that are no longer legal tender, such as pre 1837 sovereigns. CG78305 adds a warning: selling several coins may be the disposal of a set. Under section 262(4), parts of a set sold to the same person, or to connected persons or persons acting in concert, are treated as one disposal, so splitting a sale to keep each part under £6,000 does not work. CG76881 says a collection of coins is unlikely to be a set, but one containing all the denominations issued in one year or during one reign will be. See chattels and wasting assets for the detail.
Worked example: three kinds of gold
Illustration only. In 2026 to 2027 Alex sells three holdings, each bought and sold for sterling, ignoring dealer costs.
| Holding | Cost | Proceeds | Gain | Treatment | Chargeable |
|---|---|---|---|---|---|
| 20 sovereigns minted after 1837 | £6,000 | £14,000 | £8,000 | Sterling, not an asset | Nil |
| 2 Krugerrands | £2,000 | £5,000 | £3,000 | Foreign currency, no chattel relief | £3,000 |
| Gold bar | £9,000 | £12,000 | £3,000 | Chattel; cap is £6,000 x 5/3 = £10,000 | £3,000 |
Alex’s chargeable gains total £6,000. The annual exempt amount shown on GOV.UK is £3,000, so £3,000 is taxable. The sovereigns, which produced the largest gain, contribute nothing. Had the bar sold for £6,000 or less, its gain would also have been exempt. For rates and the rest of the computation, see capital gains tax rates and how capital gains tax is calculated.
Can you claim a loss on sovereigns?
No. Section 16(2) TCGA 1992 applies the rules that decide whether a gain is chargeable to decide whether a loss is allowable. Because sterling is not a chargeable asset, a fall in the gold price that leaves sovereigns or Britannias worth less than you paid produces no allowable loss. Investors who want losses to be usable against other gains have to accept that the same coins would be taxable on the way up; see capital losses.
Could frequent buying and selling be a trade?
Possibly. The capital gains exemption only helps if the activity is investment. HMRC’s Business Income Manual at BIM20260 notes that some assets yield no income and give no pride of possession, and cites Wisdom v Chamberlain [1968], where an individual’s purchases and sales of silver bullion, held short term and financed by borrowing, were held to be trading. Someone dealing in gold coins on a regular, organised basis should consider the badges of trade, because trading profits are taxed as income rather than as capital gains.
Does the VAT treatment of investment gold decide the CGT position?
No, and the two are often confused. VAT Notice 701/21 defines investment gold as gold bars or wafers of at least 995 thousandths purity in weights accepted by the bullion markets, and gold coins minted after 1800 that are at least 900 thousandths pure, are or have been legal tender in their country of origin, and are normally sold for no more than 180% of the value of their gold, together with coins on the published list in Notice 701/21A. Supplies of investment gold are exempt from VAT.
That VAT test is much wider than the CGT exemption. A Krugerrand and a gold bar are both investment gold for VAT but both are chargeable for capital gains tax. Only sterling legal tender coins escape CGT entirely.
What are the common mistakes?
- Assuming all gold coins are exempt. Only sterling legal tender coins are; Krugerrands and other foreign coins are fully chargeable.
- Applying the £6,000 chattels limit to foreign legal tender coins. Section 262(6)(b) excludes currency from that relief.
- Treating pre 1837 sovereigns as exempt currency. They are chattels.
- Splitting a set of coins between connected buyers to stay under £6,000 per sale.
- Claiming a loss on sovereigns or Britannias, which is not allowable.
- Reading the VAT exemption for investment gold as a capital gains exemption.
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Related Accountapedia entries
- Foreign currency and capital gains
- VAT on investment gold
- Which assets are exempt from capital gains tax
- Selling a property abroad: UK CGT and foreign tax
- Spread betting, CFDs and forex trading: tax treatment
Sources
- legislation.gov.uk: Act 1992 c. 12, section 21
- GOV.UK: Manual page CG78305
- GOV.UK: Manual page CG76881
- GOV.UK: Manual page CG78310
- GOV.UK: Manual page CG76550
- legislation.gov.uk: Act 1992 c. 12, section 262
- legislation.gov.uk: Act 1992 c. 12, section 16
- GOV.UK: Allowances
- GOV.UK: Manual page BIM20260
- GOV.UK: Gold acquisitions imports investments and vat notice 70121
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.