This is a question that comes up more often than you’d think, especially from people who are starting to build a meaningful gold holding and want to understand how it fits into their wider financial picture.

The straightforward answer is no. Gold is not exempt from Inheritance Tax (IHT) in the UK. But there’s a bit more to it than that, and there are some things worth knowing if you’re thinking about gold as part of your long-term plans.

How Inheritance Tax Works in the UK

When someone passes away, HMRC looks at the total value of their estate. That includes property, savings, investments, pensions (in some cases), personal belongings, and yes, physical gold.

If the total value of the estate exceeds the nil-rate band, which is currently £325,000, the excess is taxed at 40%. There’s also the residence nil-rate band, which can add up to £175,000 if you’re passing your main home to direct descendants. And if you’re married or in a civil partnership, any unused allowance from the first partner to die can transfer to the surviving partner, potentially doubling the threshold.

But the key point is this: gold bars, gold coins, and any other physical gold you own will be included in your estate valuation at their market value on the date of death.

Does It Matter What Type of Gold You Own?

Not really, at least not for IHT purposes.

You might already know that Gold Britannias and Sovereigns are exempt from Capital Gains Tax because they’re UK legal tender. That’s a valuable benefit during your lifetime. But it doesn’t carry over to Inheritance Tax. Legal tender status has no bearing on IHT.

Whether you hold Britannias, Sovereigns, Krugerrands, bars, or anything else, it all gets lumped into your estate at market value. The type of gold doesn’t change the IHT calculation.

Can You Reduce IHT on Gold?

Gold itself doesn’t come with any special IHT exemptions, but the general IHT planning strategies that apply to other assets can also apply to gold. Here are a few worth being aware of.

Gifting during your lifetime. You can give gold away while you’re still alive. If you survive for seven years after making the gift, it falls outside your estate entirely. This is known as a potentially exempt transfer (PET). There’s also an annual gift allowance of £3,000 per tax year that’s immediately exempt, plus smaller exemptions for wedding gifts, birthdays, and regular gifts out of surplus income.

Trusts. Placing gold into certain types of trust can potentially remove it from your estate, though this is a complex area with its own tax implications. It’s not something to do without professional advice.

Spouse or civil partner transfers. Assets passed between married couples or civil partners are exempt from IHT. So if you leave your gold to your spouse, there’s no IHT to pay on it at that point. The tax question only arises when the surviving partner eventually passes it on.

Charitable donations. If you leave 10% or more of your net estate to charity, the IHT rate on the rest drops from 40% to 36%. Gold included in a charitable bequest would also be exempt from IHT entirely.

These aren’t gold-specific strategies. They’re general estate planning tools. But they’re worth knowing about if gold makes up a significant part of what you own.

What About Business Property Relief?

You might have heard that certain business assets qualify for Business Property Relief (BPR), which can reduce or eliminate IHT on those assets. Some people wonder whether holding gold through a business could unlock this relief.

In practice, this is extremely unlikely to work for gold. HMRC is clear that businesses primarily involved in holding investments, which would include gold, don’t qualify for BPR. The relief is designed for trading businesses, not investment vehicles. Trying to wrap gold in a business structure purely for IHT purposes would almost certainly be challenged.

The “Hidden Asset” Myth

There’s a perception out there that physical gold is somehow invisible to HMRC. That because it sits in a safe or a vault rather than in a bank account, it won’t be counted when the time comes.

This isn’t a strategy. It’s tax evasion, and it’s illegal.

When someone dies, their executors have a legal obligation to declare the full value of the estate, including physical gold. HMRC can and does investigate estates, and penalties for underreporting are serious. It’s simply not worth the risk.

If you’re buying gold, buy it openly, keep good records, and make sure your executors know it exists. That’s the responsible approach.

Does Gold Still Make Sense for Long-Term Wealth?

Absolutely. The fact that gold isn’t IHT-exempt doesn’t make it a bad investment. Very few assets are exempt from IHT. Your house isn’t exempt. Your savings aren’t exempt. Your stocks and shares aren’t exempt. Gold is in the same boat as almost everything else you own.

What gold does offer is a store of value that has stood the test of time. It’s tangible, it’s private, it’s not tied to any single currency or government, and it tends to hold up well during periods of economic uncertainty. Those qualities don’t go away just because IHT applies.

And if you hold CGT-exempt coins like Britannias and Sovereigns, you’re still benefiting from tax-free growth during your lifetime. That’s a meaningful advantage, even if the gold eventually forms part of your taxable estate.

Planning Ahead

If you’re building a gold portfolio with the long term in mind, it’s worth having a conversation with a financial adviser or estate planner about how it fits into your overall IHT picture. There may be steps you can take now, like structured gifting or using trusts, that could reduce the eventual tax burden on your estate.

The earlier you start thinking about this, the more options you have. The seven-year rule for gifts, for example, is much more useful when you’re planning ahead rather than reacting to a health scare.

The Bottom Line

Gold is not exempt from Inheritance Tax in the UK. It’s valued at market price and included in your estate just like any other asset. But with sensible planning, there are legitimate ways to reduce the impact of IHT on your gold holdings.

The most important thing is to keep proper records of your purchases, make sure your executors know about your gold, and seek professional advice if your estate is likely to exceed the IHT thresholds.

At SMP Bullion, we help customers think about gold as a long-term investment. While we’re not tax advisers, we’re always happy to discuss the practical side of buying and holding gold in the UK.