On this page
UK investors pay 20% VAT when buying physical silver in the UK. The main legal route to avoid this is buying and storing silver in a bonded (customs-supervised) vault outside the UK VAT zone. While the silver remains in the vault, no VAT is due. VAT only becomes payable if you take physical delivery in the UK.
This guide explains how bonded vault storage works, which platforms offer it, what it costs, and who it suits.
At a glance
| Storage type | VAT on purchase | Notes |
|---|---|---|
| Physical silver delivered in UK | 20% | VAT paid upfront, not recoverable |
| UK non-bonded vault | 20% | Same as delivery - VAT due on purchase |
| Bonded vault (Switzerland, Singapore etc.) | 0% while stored | VAT due only on UK delivery |
| BullionVault (Zurich, Singapore, NY) | 0% while stored | Largest retail platform |
How bonded vault storage works
When silver is stored in a bonded warehouse or vault outside the UK VAT zone - typically Switzerland, Singapore, or the Channel Islands - it is not treated as having entered UK commerce. For a comparison of all UK silver buying options including coins and ETFs, see how to buy silver in the UK. No UK VAT is levied on purchase because the metal is not delivered into the UK.
The mechanics are straightforward. You buy silver through a platform that operates bonded vault storage. The metal is allocated to you - it’s in your name, off the provider’s balance sheet. Because it never enters the UK, no VAT is levied. When you want to sell, you do it back through the same platform. No VAT there either.
The VAT only triggers if you request physical delivery to a UK address - at which point it’s assessed on the current market value, not what you originally paid. Silver held in a bonded vault for 30 years and sold back through the platform never triggers VAT at any stage.
Platforms offering VAT-free silver storage
BullionVault
The largest retail precious metals vaulting platform by volume, with vaults in Zurich, Singapore, New York, Toronto, and London. For VAT-free silver, Zurich and Singapore are the relevant locations - London vault purchases attract UK VAT.
You buy silver by the gram or kilogram through their online marketplace. Other users sell to you at bid/ask spreads, so pricing is market-driven. Annual storage fees run at approximately 0.48% of metal value per year for silver. Insurance is included.
Silver held in Zurich or Singapore: VAT-free indefinitely. London vault: VAT applies on purchase.
BullionByPost (Secure Storage)
Primarily a delivery dealer. Their secure storage option holds metal in the UK, which means VAT applies on purchase - this is not bonded vault storage and is not the right platform for VAT-free silver.
Hard Asset Alliance
Offers access to Singapore and Swiss vaulting for UK investors. Less well-known than BullionVault but operates similarly.
Cost comparison: paying VAT upfront vs bonded vault
Assume 100oz of silver at £27/oz = £2,700.
| UK physical (VAT paid) | Bonded vault (BullionVault Zurich) | |
|---|---|---|
| Purchase price | £2,700 | £2,700 |
| VAT | £540 | £0 |
| Total upfront cost | £3,240 | £2,700 |
| Annual storage (0.48%) | £0 | ~£13/year |
| 5-year storage total | £0 | ~£65 |
| Cost at breakeven vs UK | - | ~£65 vs £540 saved |
Over 5 years, the bonded vault saves approximately £475 net of storage costs on this position, assuming the silver price stays flat. If silver prices rise, the VAT saving as a percentage of value grows.
What happens if you want physical delivery?
You can request delivery from BullionVault at any time. VAT at 20% becomes due based on the current market value of the silver at the time of delivery - not the original purchase price.
If you bought silver at £27/oz and it is now worth £50/oz, you pay VAT on £50/oz. The higher the silver price when you take delivery, the larger the VAT bill.
For most long-term holders, the intention is never to take UK delivery. The metal is either sold back through the platform (no VAT event) or transferred to a beneficiary who continues to hold in the vault.
CGT on bonded vault silver
Selling silver held in a bonded vault at a profit is a taxable capital gain, regardless of where the vault is located. The CGT position is the same as for physical silver held in the UK - gains above the £3,000 annual exempt amount are taxed at 18% or 24%.
The bonded vault strategy solves the VAT problem. It does not solve the CGT problem.
For CGT-free silver exposure, the Silver Britannia (held physically in the UK) remains the only available route - though it attracts 20% VAT on purchase.
There is no route to both VAT-free and CGT-free silver for UK investors in standard market conditions.
Tax and regulation
VAT: Silver stored in a non-UK bonded vault is outside the UK VAT system. No VAT is due on purchase or sale through the platform. VAT at 20% becomes due on UK delivery.
CGT: Applies to any gain on silver held in a bonded vault, as above.
FCA: BullionVault is not FCA-regulated as a financial services provider. It operates as a trading and vaulting platform. Client assets (silver) are segregated and held in your name - not on BullionVault’s balance sheet - which provides protection in the event of BullionVault’s insolvency.
AML: KYC checks (identity verification) are required by all bonded vault platforms in line with anti-money laundering regulations.
This guide contains factual information only and does not constitute financial or tax advice.
How people usually decide
The numbers make the case pretty clearly. On a £5,000 silver position, you’re saving £1,000 in VAT at entry. Annual storage at BullionVault runs around £24 on that position. The breakeven versus paying UK VAT is measured in weeks, not years.
For smaller or one-off purchases, the simplicity of physical delivery is often worth the VAT. Buying three Silver Britannias as a gift is not a position you manage on a platform.
If you want to hold the metal physically - coins in your hand, bars in your safe - the 20% VAT is the price of that preference. There is no way around it for UK-delivered silver.
Frequently asked questions
Is BullionVault safe? BullionVault client silver is held in segregated allocated storage - it is not on BullionVault’s balance sheet and would not be available to creditors in an insolvency. The platform is independently audited. It has been operating since 2005 with no reported losses of client metal. That said, it is not FCA-regulated and there is no FSCS protection.
Can I visit and inspect my silver? Not typically. Vault access is not offered to individual clients for operational and security reasons. Holdings are verified through independent audits, and you can view your allocated bar list online.
Is the VAT saving permanent? Yes, as long as the silver remains in the bonded vault and is sold through the platform rather than delivered to the UK. The VAT is never crystallised unless you request UK delivery.
What is the minimum investment? BullionVault allows purchases by the gram. There is no minimum size, though storage charges make very small positions disproportionately expensive. Positions below approximately £1,000 in silver face storage costs that are meaningful relative to the asset value.