If you trade gold, the single most important VAT question you'll face is deceptively simple: is this investment gold, or is it not?
Get it right and an investment gold sale leaves your shop VAT-free. Get it wrong and you've either undercharged HMRC on a taxable sale or overcharged a customer on an exempt one. Neither is a comfortable conversation.
This guide walks through the investment gold VAT exemption under VAT Notice 701/21, what counts as investment gold, how the margin scheme handles second-hand jewellery, and the special accounting scheme that flips VAT onto your business buyer. It's written for UK jewellers, bullion dealers and pawnbrokers who handle both the bullion and the bench.
We'll keep the figures dated to the 2025/26 tax year and cite the gov.uk page behind every rule.
Is investment gold exempt from VAT?
Yes. Supplies of investment gold are exempt from VAT, subject to a limited option to tax. That means when you sell qualifying investment gold you don't charge VAT on it, and your customer pays no VAT.
The exemption sits in the VAT Act 1994, Schedule 9, Group 15, and HMRC explains how it works in VAT Notice 701/21. The thinking behind it is that investment gold behaves like a financial product, so it's treated more like stocks and shares than like a normal taxable good.
The catch is that "investment gold" is a tightly defined term. Most of the gold passing over a jeweller's counter, rings, chains, bracelets, is not investment gold, and it's fully standard-rated. The rest of this guide is really about telling the two apart.
What counts as investment gold under Notice 701/21?
Investment gold falls into two categories, and the definition is exact.
Gold bars and wafers. Gold of a purity of not less than 995 thousandths, in the form of a bar or wafer of a weight accepted by the bullion markets. So a standard 1oz or 100g bar of 999.9 fine gold qualifies. A 916 (22 carat) bar would not, because it's below the 995 purity floor.
Investment gold coins. A gold coin qualifies as an investment gold coin where it meets all of the following, set out in VAT Notice 701/21A:
- it's of a purity of not less than 900 thousandths
- it was minted after 1800
- it is, or has been, legal tender in its country of origin, and
- it's normally sold at a price that does not exceed 180 per cent of the open market value of the gold it contains.
So a Sovereign or a Krugerrand sold near its bullion value is investment gold. The same coin sold at a heavy numismatic premium (more than 180 per cent of its gold content) can fall outside the exemption, because at that point you're selling rarity, not gold.
HMRC publishes a list of coins it recognises as investment gold coins, updated periodically. If a coin is on that list, you can treat it as investment gold without re-testing the 180 per cent rule for that year.
The practical line for a jeweller: bullion bars at 995+ and recognised bullion coins are exempt investment gold. A wedding ring is not, however pure the metal, because it isn't a bar, wafer or qualifying coin.
How is ordinary gold jewellery treated for VAT?
New and finished gold jewellery is a standard good. If you're VAT-registered, you charge VAT at the standard rate of 20% on the full selling price (the current standard rate per gov.uk).
That applies whether the piece is 9 carat or 24 carat. Carat (fineness) decides whether something could be investment gold; it doesn't decide jewellery VAT. A 24 carat (999) gold bangle is still standard-rated jewellery, because it isn't a bar, wafer or coin. It's worn, not banked.
The same logic catches gift items, watches with gold cases, and most coins sold for their collectable value rather than their metal content.
There's a small but useful exception coming up next: when the jewellery is second-hand, you may be able to charge VAT only on your margin rather than the whole price.
When can I use the VAT margin scheme on second-hand jewellery?
The VAT margin scheme lets you account for VAT on your profit margin instead of the full selling price, which is a real saving when you buy second-hand pieces from the public (who can't give you a VAT invoice). HMRC sets out the rules in the margin and global accounting scheme guidance (formerly VAT Notice 718).
Under the scheme, VAT is due on the margin, which is your selling price minus your purchase price. The VAT is the VAT fraction of that margin: at the 20% standard rate, the fraction is 1/6. So if you buy a second-hand gold necklace for £400 and sell it for £700, the margin is £300 and the VAT is £300 x 1/6 = £50. You account for £50, not £700 x 20% = £140.
The basic conditions:
- the goods must be eligible second-hand goods, meaning goods suitable for further use as they are or after repair
- you must have bought them in circumstances where you couldn't reclaim input VAT (typically from a private individual, or another dealer using the scheme)
- you keep the prescribed stock-book records linking each purchase to each sale.
Now the parts that trip jewellers up. You cannot use the margin scheme for:
- new goods (a brand-new ring you make or buy in)
- goods you bought on a VAT invoice and reclaimed the input VAT on
- investment gold (it's exempt, so the margin scheme doesn't apply), or
- gold bought as an investment-grade commodity rather than as a second-hand item.
In other words: the margin scheme is for genuinely second-hand jewellery and collectables, not for bullion. A scrap-gold or melt transaction is usually a gold-material supply (see the special accounting scheme below), not a second-hand goods sale, so the margin scheme generally won't fit it.
What is the special accounting scheme for gold?
This is the rule that catches business-to-business gold deals, and it's where a lot of jewellers and bullion traders slip up.
Under the special accounting scheme for gold (a domestic reverse charge set out in Notice 701/21), when you make a taxable supply of gold to another UK VAT-registered business, you don't add VAT to your invoice. Instead, the buyer accounts for the output VAT to HMRC on your behalf, and recovers it as input tax subject to the normal rules.
So the customer pays you the VAT-exclusive price, and HMRC gets the VAT from the buyer's return. Your sales invoice must show all the usual VAT invoice details plus a clear statement that the VAT is to be accounted for by the buyer.
Two things to hold onto:
- The scheme is about who accounts for the VAT, not about whether VAT is due. Exempt investment gold stays exempt; the reverse charge is for the taxable gold supplies that would otherwise carry VAT.
- It's a business-to-business mechanism. A normal retail sale of jewellery to a member of the public is unaffected. You charge them the 20% in the usual way.
If you sell gold material, semi-manufactured gold, or investment-grade gold to a VAT-registered trade buyer, check whether the reverse charge applies before you issue the invoice. Charging VAT when the reverse charge should apply (or vice versa) is a common, correctable, but irritating error.
Can I opt to tax investment gold, and should I?
Because investment gold is exempt, the VAT you incur on costs linked to it is, by default, not recoverable. To soften that, Notice 701/21 lets certain traders opt to tax their investment gold supplies, turning them into taxable supplies and freeing up input tax recovery.
Who can opt:
- producers or transformers of investment gold making supplies to another taxable person
- traders who, in the normal course of business, supply gold for industrial purposes and regularly make exempt investment gold supplies (you need HMRC's approval before opting), and
- agents acting for a principal who has opted.
A typical high-street jeweller reselling bullion coins to the public usually can't opt and wouldn't benefit, because the customers are consumers who can't reclaim VAT.
Even where you don't opt, you can recover input VAT that's directly attributable to your exempt investment gold supplies, for example VAT charged to you when you bought investment gold, the cost of transforming other gold into investment gold, and directly related services. This is a specific allowance in Notice 701/21 and sits alongside your normal partial exemption position.
This is genuinely fiddly. If a meaningful slice of your turnover is bullion, it's worth getting your input tax recovery and any option to tax reviewed properly. Our VAT advisory team does this work for gold traders.
What records and money-laundering rules apply?
Two regimes overlap here, and a jeweller dealing in bullion needs both.
Investment gold records (Notice 701/21). If you trade in exempt investment gold you must keep specific records. The first time you make an exempt supply of investment gold over £5,000, or once your exempt investment gold supplies to a single customer exceed £10,000 in any 12-month period, you must notify HMRC within 28 days. You also keep accounting records of each transaction (description of the gold, value, customer reference) and customer identification records, retained for at least 6 years.
High value dealer money-laundering supervision. Separately, if your business accepts or makes cash payments of 10,000 euros or more (or the equivalent in any currency) for goods, in a single transaction or in linked instalments, you're a high value dealer and must register for money-laundering supervision with HMRC. HMRC sets this out in its high value dealer registration guidance. Registration is required before you accept such payments, and applications can take up to 45 days. Many jewellers simply cap cash at below the limit to stay outside the regime.
These are different obligations with different triggers. The £5,000 and £10,000 figures are VAT notification thresholds; the 10,000 euro figure is a cash money-laundering threshold. Don't conflate them.
While we're on the wider picture: gold you buy as equipment for the business (say a melting furnace or a laser welder) isn't stock at all. That's plant and machinery, and the cost can usually be relieved against profits through capital allowances, including the Annual Investment Allowance of £1,000,000 for qualifying expenditure (current limit per gov.uk). That's a separate question from the VAT on your gold sales.
Illustrative example: one shop, three sales, three VAT outcomes
Illustrative example. Meera runs a VAT-registered jewellery and bullion shop. In one week she makes three sales. The figures below are for illustration only, using the 20% standard rate and 1/6 VAT fraction for 2025/26.
Sale 1: a 100g gold bar, 999.9 fine, for £8,000. This is investment gold (a bar of 995+ purity, bullion-market weight). It's exempt. Meera charges no VAT. Sale price to the customer: £8,000.
Sale 2: a new 18 carat gold ring for £1,200. This is finished, new jewellery, fully standard-rated. VAT is £1,200 x 1/6 = £200, so £1,000 net plus £200 VAT. (If she'd quoted £1,200 plus VAT, the VAT would be £240.)
Sale 3: a second-hand gold bracelet bought from a member of the public for £500 and sold for £900. Eligible for the margin scheme. Margin is £900 minus £500 = £400. VAT due is £400 x 1/6 = £66.67. Meera accounts for £66.67, not £900 x 20% = £180.
| Sale | What it is | VAT treatment | VAT Meera owes HMRC |
|---|---|---|---|
| 100g 999.9 bar, £8,000 | Investment gold | Exempt | £0.00 |
| New 18ct ring, £1,200 gross | New jewellery | Standard-rated (1/6 of gross) | £200.00 |
| Second-hand bracelet, bought £500, sold £900 | Second-hand goods | Margin scheme (1/6 of £400 margin) | £66.67 |
Same shop, same week, three completely different VAT answers. That's why the classification step matters more than anything else.
A quick decision walkthrough
Work through it in this order for each gold item you sell:
- Is it a bar or wafer of 995+ purity at a bullion weight, or a recognised investment gold coin (900+, minted after 1800, legal tender, sold at no more than 180% of gold value)? If yes, it's investment gold: exempt, no VAT charged. Check your record-keeping and notification thresholds.
- If not, is the buyer a UK VAT-registered business and the supply gold material or investment-grade gold? If yes, consider the special accounting scheme reverse charge: the buyer accounts for the VAT.
- If it's a retail sale of jewellery, is the item second-hand and bought without recoverable input VAT? If yes, you can use the margin scheme: VAT on the margin at 1/6.
- Otherwise it's standard-rated: charge 20% on the full price.
When you fill in your VAT return, exempt investment gold sales go in your total sales (Box 6) with no output VAT, margin scheme sales put only the VAT on the margin into Box 1, and standard sales carry the full output VAT into Box 1. If you're unsure which box a transaction belongs in, that's exactly the kind of thing worth checking before you file.
Want a second pair of eyes on how your shop handles bullion, scrap and second-hand pieces? We work with gold traders day to day. See how we support accountancy for jewellers, or book a call with a Zmartly accountant to review your VAT treatment before your next return.
Frequently asked questions
Is gold bullion VAT-free in the UK?
Investment gold bullion is exempt from VAT, which means no VAT is charged on the sale. To qualify, a bar or wafer must be of a purity of not less than 995 thousandths and of a weight accepted by the bullion markets. Investment gold coins (900+ purity, minted after 1800, legal tender, sold at no more than 180% of their gold value) are also exempt. Ordinary gold jewellery is not, and is standard-rated.
Do I charge VAT on gold jewellery?
Yes. New, finished gold jewellery is a standard good and you charge VAT at 20% on the full selling price if you're VAT-registered, whatever the carat. If the piece is genuinely second-hand and you bought it without recoverable input VAT, you may instead use the margin scheme and account for VAT only on your profit margin.
What is the VAT margin scheme for second-hand jewellery?
It lets you pay VAT on the difference between what you paid and what you sell for, rather than on the whole price. The VAT is 1/6 of that margin at the 20% rate. It applies to eligible second-hand goods bought without a reclaimable VAT invoice, with proper stock-book records. It cannot be used for new goods or for investment gold.
Who accounts for VAT under the special accounting scheme for gold?
The buyer does. When you supply taxable gold to another UK VAT-registered business under the special accounting scheme (a domestic reverse charge), you don't add VAT to the invoice. The buyer accounts for the output VAT to HMRC and recovers it under the normal rules. Your invoice must state that the VAT is to be accounted for by the buyer.
Do jewellers have to register for money-laundering supervision?
If your business accepts or makes cash payments of 10,000 euros or more for goods, as a single payment or as linked instalments, you're a high value dealer and must register for money-laundering supervision with HMRC before accepting such payments. Many jewellers cap cash below that limit to stay outside the regime. This is separate from your VAT obligations.
