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UK parents can legally buy gold for their minor children. The tax implications depend on the product type, who buys it, how it is held, and when the child sells. The parental settlement rules - HMRC’s anti-avoidance provisions for gifts to minor children - are the main complexity.
The basic structure: bare trust
When a parent buys gold for a child under 18, the asset is typically held in an informal bare trust. The child is the beneficial owner - it is their asset, not the parent’s. But because minors cannot legally contract to hold significant assets in their own name, the parent or another adult typically holds it on the child’s behalf.
When the child turns 18, the asset passes to them automatically. They can then sell, keep, or do what they wish with it.
The parental settlement rules
This is where it gets complicated. HMRC’s Settlements legislation (Income Tax Act 2007, Chapter 5) provides that income and gains arising on assets given by a parent to their minor child are taxed on the parent, not the child.
What this means in practice:
If a parent buys gold bars for a child and the bars are sold at a profit while the child is under 18, any taxable capital gain is assessed on the parent - using the parent’s CGT rates and annual exempt amount.
The Sovereign exception:
Gold Sovereigns and Britannias are CGT-exempt. There is no taxable gain to attribute to anyone. The parental settlement rules become irrelevant for CGT-free coins. This is a meaningful advantage and the main reason Sovereigns are the natural choice for gifts to children.
Worked example: Sovereign vs bar
Parent buys a Gold Sovereign for child (age 10). Gold doubles. Child sells at age 18.
- CGT on sale: None. Sovereign is CGT-exempt for anyone - child, parent, or third party.
- Parental settlement rules: Irrelevant - no taxable gain arises.
- Result: The full doubling of value is retained.
Parent buys a 1oz gold bar for child (age 10). Gold doubles. Child sells at age 18.
- If sold before child turns 18: The gain is attributed to the parent under parental settlement rules. Parent pays CGT at their marginal rate on any gain above their annual exempt amount.
- If sold after child turns 18: The gain is the child’s. The child uses their own annual exempt amount (£3,000 in 2026/27) and their own CGT rates.
- Result: Bars held past age 18 avoid the parental attribution problem.
Junior ISA option
For those who want tax-efficient gold exposure for a child through the financial system rather than physical coins:
A Stocks and Shares Junior ISA can hold gold ETCs (like iShares IGLN), with gains sheltered from CGT and income tax. The annual contribution limit is £9,000 per child (2026/27) - enough to build a meaningful position over time without tax drag.
The child cannot access the funds until they turn 18, at which point it converts to an adult ISA.
Trade-off: You do not own physical gold coins. A JISA holds financial instruments, not metal. The CGT benefit inside the ISA wrapper applies to ETF/ETC gains, not to physical coin holdings.
Comparison of approaches
| Approach | CGT position | IHT position | Physical gold | Notes |
|---|---|---|---|---|
| Sovereign in bare trust | CGT-exempt (no gain to attribute) | 7-year rule for gifts | Yes | Cleanest approach for physical gold |
| Gold bar in bare trust | Parent’s rates if sold before 18; child’s rates if sold after | 7-year rule | Yes | Consider delaying sale until 18 |
| Gold ETC in JISA | Exempt within JISA | Outside estate when in JISA | No | Clean tax wrapper; no delivery |
IHT implications of gifting to children
Gifts from a parent to a minor child start the seven-year IHT clock (unless covered by the £3,000 annual exemption, wedding exemption, or small gifts exemption). If you survive seven years, the gift is fully outside your estate.
The parental settlement rules and the IHT seven-year clock operate independently. A gift can be IHT-exempt under the annual £3,000 allowance but still trigger the parental settlement rules for CGT.
Tax and regulation
CGT: Parental settlement rules attribute gains on gifts to minor children back to the parent. Exception: CGT-exempt coins (Sovereigns, Britannias) have no taxable gain to attribute.
IHT: As for any gift - subject to the seven-year rule unless covered by available exemptions.
Bare trusts: No formal legal documentation is required for a simple bare trust between parent and child, but keeping a note of the date of gift, the item, and its value at the time is good practice for any future tax or estate questions.
This guide contains factual information only and does not constitute financial or tax advice.
How people usually decide
Parents buying gold for children almost always end up with Gold Sovereigns. The CGT exemption eliminates the parental settlement problem entirely, the lower per-unit price suits gradual accumulation, and the physical coin is something tangible the child can eventually hold.
Bar purchases for children make more sense if the bar will be held well past age 18, where the child’s own CGT allowance applies and the parental attribution rules no longer matter.
Frequently asked questions
Can my child own gold legally? Yes. A minor can be the beneficial owner of gold held in a bare trust. They cannot enter into contracts in their own name until 18, so a parent or guardian holds the asset on their behalf.
Will my child pay CGT when they sell Sovereigns? No. Gold Sovereigns are CGT-exempt regardless of the owner’s age. Your child can sell at 18 with no CGT.
What if I buy gold for my child and then separate from my partner? Gold held in a bare trust for the child belongs to the child, not to either parent. It would not form part of a matrimonial asset split. However, this is a complex area in family law and legal advice is relevant if a significant value is involved.