This is one of the most common questions people ask when they first start looking at physical gold. And it’s a good one, because coins and bars aren’t just different shapes of the same thing. They come with different tax treatments, different premiums, and different levels of flexibility. The right choice depends on what matters most to you.

Let’s walk through the key differences so you can figure out which option fits your situation.

The Tax Advantage of Gold Coins

This is the big one, and it’s often the deciding factor for UK buyers.

Certain gold coins issued by The Royal Mint are classed as legal tender in the UK. That includes Gold Britannias, Gold Sovereigns, and a handful of other British coins. Because they’re legal tender, they’re completely exempt from Capital Gains Tax (CGT).

That means if you buy a Britannia today and sell it in ten years at a profit, you don’t owe HMRC a penny of that gain. Not a thing.

Gold bars, on the other hand, are subject to CGT. Everyone gets an annual tax-free allowance (currently £3,000), so smaller gains may not trigger a bill. But if you’re building a serious position in gold over time, those gains can add up, and bars won’t protect you from that.

For a lot of people, especially those investing larger amounts or planning to hold for the long term, this CGT exemption alone makes coins the more attractive option.

It’s worth mentioning that both coins and bars are VAT-free in the UK, provided they meet the minimum purity standard of 99.5% for bars and 90% for coins (though most popular investment coins are 99.99% pure). So VAT isn’t a differentiator here.

Premiums: Where Bars Have the Edge

If tax isn’t your primary concern, bars tend to offer better value in terms of pure gold content per pound spent.

Gold bars generally carry lower premiums over the spot price compared to coins of the same weight. A 1oz gold bar might come with a premium of around 3% to 6%, while a 1oz Britannia could sit at 5% to 10% or more, depending on demand and availability.

The reason is straightforward. Coins cost more to produce. They’re struck with detailed designs, have legal tender status, and go through more quality control. Bars are simpler to manufacture, especially at larger sizes, so the production costs per gram are lower.

If you’re buying in larger sizes like 100g or 1kg, bars become even more efficient. The premium per gram drops significantly at those weights, which is why institutional buyers and high-net-worth investors often lean toward bars.

Liquidity and Resale

Both coins and bars are easy to sell in the UK, but coins have a slight edge when it comes to liquidity.

Gold Britannias and Sovereigns are recognised worldwide. Any reputable dealer will buy them without hesitation, and they don’t usually need to be assayed or verified beyond a visual check of the packaging. Their standardised weight and design make transactions quick and simple.

Bars are also easy to sell, particularly if they’re from well-known refiners like PAMP Suisse, Valcambi, Umicore, or Metalor, and they’re still in their original sealed packaging. But lesser-known brands or bars that have been removed from their packaging may need additional verification, which can slow things down slightly.

Another practical advantage of coins is flexibility in how much you sell. If you hold ten 1oz Britannias, you can sell three and keep seven. If you hold a single 10oz bar, it’s all or nothing. Coins give you more control over partial liquidation.

Storage and Practicality

In terms of physical storage, bars tend to be more space-efficient, especially at larger sizes. A 1kg bar takes up far less room than the equivalent weight in individual coins. If you’re storing gold at home in a safe or using a vault service, this can make a real difference as your collection grows.

Coins, while slightly bulkier per gram, are easier to handle in smaller quantities. Each one comes in its own capsule or packaging, which makes organising and counting straightforward.

For most people buying in modest amounts, the storage difference is negligible. It only really becomes a factor once you’re holding significant quantities.

Collectability and Aesthetic Value

This might not matter to every buyer, but it’s worth a mention. Coins are often more enjoyable to own. There’s something satisfying about holding a beautifully designed Britannia or a historic Sovereign. Many coins also come in limited edition or proof versions that carry numismatic value on top of their gold content.

Bars are more utilitarian. They do the job, they hold value, and they’re efficient. But they don’t tend to spark the same kind of appreciation that a well-crafted coin does.

If you’re someone who values the experience of collecting alongside the investment, coins are hard to beat.

So Which Should You Choose?

Here’s a simple way to think about it.

Choose coins if you want CGT-free gains, you value liquidity and easy resale, you prefer flexibility to sell in smaller increments, or you enjoy the collecting side of things. Gold Britannias and Sovereigns are the go-to choices for most UK investors, and for good reason.

Choose bars if you’re focused on getting the most gold for your money, you’re buying in larger quantities where premium savings really add up, or you’re less concerned about CGT because your gains will fall within the annual allowance.

Or do both. There’s no rule that says you have to pick one or the other. A lot of experienced buyers hold a mix. They’ll use coins as the core of their portfolio for the tax benefits, and add bars when they want to bulk up their holdings efficiently. That way you get the best of both worlds.

The Bottom Line

For most UK buyers, especially those investing for the medium to long term, coins tend to be the smarter default choice. The CGT exemption is a genuine and significant advantage that can save you thousands of pounds over time. The slightly higher premium you pay upfront is usually worth it when you factor in the tax savings down the line.

But bars still have their place, particularly for larger purchases or for buyers who want maximum gold content at the lowest possible cost.

At SMP Bullion, we carry a wide range of both gold coins and gold bars from trusted mints and refiners. If you’re not sure which is right for you, feel free to get in touch. We’re always happy to talk it through.