Capital Gains Tax on Gold Investments: Annual Allowance and Tax Implications

In 2017 I invested £10k in gold. Today this is worth £20k - an increase of £10k over 7 years. As there is an annual allowance of £3k, does that mean I have £21k worth of allowance since the investment started? Do I have to declare the increase every year? Or is it only when I cash in the gold that I will have to pay 20% of the £7k?

The thing you need to plug into your calculations is how much you bought something for. And how much you sold it for. And the difference is the capital loss or gain which becomes effective in the tax year during which you sell it. So in your example, you have a capital gain of £10,000. If you sold that today, you would have a capital gain of £10,000 in the April 2024 – April 2025 tax year. If you are a higher-rate taxpayer and you sold today, you would pay 24% on the taxable gain. This would be the £10,000 gain, less your £3,000 allowance, so that’s £7,000 on which you pay 24%. The number of years you have had the asset doesn’t come into the calculation.

If you are a basic rate taxpayer you would add the £7,000 taxable gain to your taxable income. (All income less the tax-free income allowance). If the total is still in the basic income tax band you would pay 18% CGT on your gains. If some tips over into the higher income tax bracket, you would pay 24% on the amount that tips over the basic income tax band.

So basically it’s now 18% or 24%. All are due in the year you sell. The precise amount depends on whether you are a basic or a higher-rate taxpayer and whether the capital gain takes you over the basic rate thresholds.

I have taken an example from HMRC’s website here which I hope is helpful.