Supplies of investment gold are exempt from VAT. Investment gold means bars or wafers of at least 995 thousandths purity in a weight the bullion markets accept, and gold coins minted after 1800 of at least 900 thousandths purity that are or have been legal tender and normally sell for no more than 180% of their gold value, plus any coin on HMRC’s published list. Producers, transformers and industrial gold traders can opt to tax sales to other businesses, and every dealer faces special notification, invoicing and customer record rules once sales pass £5,000.
Tax investigation insurance from £108.75 a year (£9.06 a month).Pays up to £100,000 of your accountant's fees if HMRC opens an enquiry. No excess. Buy online in a few minutes.
What counts as investment gold?
The exemption sits in Group 15 of Schedule 9 to the VAT Act 1994 and HMRC explains it in VAT Notice 701/21 (Gold imports and exports) and Notice 701/21A (Investment gold coins). There are two categories.
Bars and wafers
Gold of a purity not less than 995 thousandths, in the form of a bar or wafer of a weight accepted by the bullion markets. Section 15 of Notice 701/21 lists the weights commonly traded:
| Unit | Weights |
|---|---|
| London Good Delivery bar | 12.5 kilogram |
| Kilogram bars | 1 kilogram |
| Gram | 500, 250, 100, 50, 20, 10, 5, 2.5 and 1 gram |
| Ounce (31.1035 grams) | 100, 10, 5, 1, half and quarter ounce |
Coins
A gold coin is investment gold if it was minted after 1800, has a purity of at least 900 thousandths, is or has been legal tender in its country of origin, and is of a description normally sold at a price not exceeding 180% of the open market value of the gold it contains. A coin on the list in section 3 of Notice 701/21A also qualifies. HMRC publishes that list as a spreadsheet and updated it most recently on 3 July 2026. Coins outside both definitions are standard rated.
How do the coin type and 180% tests work?
Notice 701/21A applies the tests to coin types, not individual coins. All gold coins with the same denomination, size and fineness count as the same type, so a change of design does not create a new type. HMRC notes that a type may be a single year issue or, like the British sovereign, may have been produced for almost two centuries.
Only the price test is subjective. It turns on the normal selling price, meaning the price usually asked for that type in the condition in which it is most often traded. If most coins of a type trade in brilliant uncirculated condition, that value is used; if most are proofs, the proof value is used. If a type normally sells above 180% of its gold value, an individual coin in poor condition worth less than that is still standard rated, because the test looks at the type.
Worried about an HMRC check? Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry or compliance check. Solar Protect cover pays up to £100,000 with no excess. It never pays tax, interest or penalties.
From £108.75 a year (£9.06 a month) for individuals, £117.57 for sole traders and £207.50 for companies and partnerships, including IPT and the £20 admin fee.
See my price in 2 questions or call 01795 841 310.
★★★★★ Rated 4.9 out of 5 on Trustpilot from over 160 reviews
Which supplies are exempt?
Paragraph 2.2 of Notice 701/21 exempts:
- a supply of investment gold
- a supply giving the right to take possession of investment gold, including unallocated gold, loans, swaps, forward and futures contracts, but not options
- an agent’s services in bringing about such a supply for a named principal, whether or not the deal goes ahead
Imports of investment gold from outside the UK are exempt if the transaction is entered under Customs Procedure Code 40 00 073, and exports are outside the scope of UK VAT with input tax recovered under the normal rules. Other gold, such as scrap, grain and jewellery gold, is standard rated, and many business to business sales of it fall within the compulsory Special Accounting Scheme for gold in section 11, under which the buyer, not the seller, accounts for the VAT. For the capital gains position, which follows different rules, see gold coins and capital gains.
Who can opt to tax investment gold, and why would they?
Opting to tax turns an exempt sale into a taxable one so that all directly related input tax becomes recoverable. Section 4 of Notice 701/21 limits the option to three groups, and only for supplies to another taxable person. Sales to private buyers are always exempt.
- Producers and transformers of investment gold may opt to tax bars, wafers and coins they have produced or transformed themselves, after notifying HMRC’s Written Enquiries Section.
- Businesses that normally supply gold for industrial purposes may opt to tax sales of bars and wafers, but only with HMRC’s written agreement, which normally comes with conditions and can be withdrawn.
- Agents acting for a named principal who has opted may opt to tax their related services, again after notifying HMRC.
If no acknowledgement arrives within 28 days, the business must check that HMRC received the notification. The option is made transaction by transaction by putting the words “We have opted to tax this transaction.” on the invoice, and once made for a supply it cannot be reversed. Opted supplies between VAT registered businesses fall within the Special Accounting Scheme, so the buyer accounts for the output tax.
What input tax can an exempt gold dealer still recover?
Exempt supplies normally carry no input tax recovery, but paragraph 5.2 lets a business making exempt supplies of investment gold reclaim VAT on investment gold it bought with VAT charged, on other gold it will transform into investment gold, on having gold transformed, and on services changing the form, weight or purity of gold. A business that produces or transforms gold itself can also reclaim VAT on costs linked to that process, such as machinery, crucibles and furnace linings, laboratory equipment, tools, fuel and power, buildings and fume abatement. VAT on costs not linked to production, such as a computer used to record exempt sales, stays irrecoverable. Overheads used across exempt gold and other activities are apportioned first under the normal partial exemption rules and then tested against these special rules.
When must a dealer notify HMRC and issue invoices?
These parts of the notice have force of law and apply whether or not the trader is VAT registered. A business must notify HMRC’s Written Enquiries Section within 28 days the first time it makes an exempt supply of investment gold over £5,000, or when its exempt supplies to any one customer exceed £10,000 in a 12 month period. It must issue an invoice with a unique number for each sale over £5,000, and for smaller sales once that customer’s total has passed £10,000 in the last 12 months.
When a dealer buys from someone who does not trade in investment gold, above the same limits, the dealer must raise the invoice on the seller’s behalf and have the seller sign a declaration that the details are correct to the best of their knowledge. Each invoice must show the parties’ names and addresses, a unique customer reference, dates, any VAT number, and a description: form, weight, purity and identifying marks for bars, or coin type, country of origin and whether it is on the Notice 701/21A list for coins.
Illustration only. A dealer sells a 100 gram bar of 999.9 gold to a private customer for £7,000. The bar is investment gold, the sale is exempt, and because it exceeds £5,000 the dealer must issue a numbered invoice and keep a customer record; if it is the dealer’s first such sale it must also notify HMRC within 28 days. Another customer buys a 1 ounce bar for £2,500 each month. No invoice is required at first, but once that customer’s purchases pass £10,000 in a 12 month period the invoicing and record rules apply to later sales.
What records and customer checks are required?
Paragraph 7.1 requires an accounting record (invoice number and date, customer reference, VAT number if any, description, agent, purchaser and value) and a customer record holding name, date of birth, current address and phone number. The dealer must see an original document from each of two lists: a passport, full driving licence, National Insurance card, birth certificate or national identity card; and a phone or utility bill, deeds, tenancy, council tax bill or, for non UK residents only, a hotel key card. Copies should be certified, signed and dated, or enough details recorded for HMRC to obtain one.
There are alternatives. Banks that are a relevant financial business under the money laundering rules may rely on those records. Internet and mail order sellers may record card or bank details instead, with proof of despatch. Sales to VAT registered businesses can rely on a VAT number verified with HMRC. Records must be kept for at least 6 years from the transaction, or 6 years after the latest supply for regular customers, and buyers must keep purchase invoices for 6 years.
What happens if the rules are not followed?
Because gold moves easily between exempt and taxable forms, HMRC relies on these records as an audit trail. Section 9 sets a penalty, introduced by the Finance Act 2000, normally of 17.5% of the value of the transactions concerned. It cannot be assessed more than 4 years after the transaction or more than 2 years after HMRC had enough facts. There is no penalty with a reasonable excuse, though HMRC does not accept insufficient funds or reliance on a third party, and it can be mitigated for factors such as cooperation and the seriousness of the breaches.
Common errors include putting investment gold coins through the margin scheme, which Notice 701/21A forbids; charging VAT to private buyers after opting; and auctioneers entering investment coins into the auctioneers’ scheme, for which they are not eligible.
If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.
Related Accountapedia entries
- Zero rated vs exempt supplies
- How VAT works: output tax and input tax
- VAT on commercial property: sales and lettings
- Reverse charge on services bought from abroad
- Do I charge VAT when selling business assets
- Accounting for art, gold and collectables held by a company
Sources
- GOV.UK: Investment gold coins and vat notice 70121a
- GOV.UK: Gold acquisitions imports investments and vat notice 70121
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.