By Rocco Clayfield, Founder & Director, GoldPaid Ltd · Published 6 August 2026
Two taxes, and normally neither applies
There are only two routes by which money from a scrap gold sale becomes taxable in the UK. Either it is a capital gain, and the Capital Gains Tax rules apply, or it is trading profit, and Income Tax does. Someone emptying a drawer of broken chains and odd earrings is normally outside both, but for different reasons, and it is worth being able to tell which reason is doing the protecting.
The capital side: why scrap rarely produces a chargeable gain
Gold jewellery, broken or whole, is a chattel: an item of tangible, movable property. HMRC’s helpsheet HS293 sets the reporting trigger clearly. You only need to include in your tax return a gain on the disposal of personal possessions where the disposal proceeds were more than £6,000. The threshold is per item and per disposal, not per parcel.
That distinction is the one most people get wrong. A bag of scrap that fetches £4,000 in total is not a single £4,000 disposal of some unnamed asset. It is a series of disposals of individual rings, chains and earrings, each realising a fraction of that total. Almost nothing in a domestic scrap lot crosses £6,000 on its own.
The second reason is simpler still. Scrap pays for the metal, not for the design, the brand or the VAT that sat in the original retail price, so a piece bought at retail and sold as scrap is usually sold at a loss rather than a gain. No gain, no charge. Our guide to spot price versus scrap price sets out where that gap comes from.
The loss is generally not usable either. HS293 says that where disposal proceeds were less than £6,000, the loss is restricted by treating the proceeds as £6,000 and recalculating. For most household scrap that removes the loss altogether. Where proceeds do exceed £6,000, marginal relief limits the chargeable gain to five-thirds of the excess over £6,000, and you use whichever is lower, that figure or the actual gain. Above that, the annual exempt amount for 2026 to 2027 is £3,000, with gains charged at 18% within your remaining basic-rate band and 24% above it.
The one thing that can catch a mixed lot: sets
HS293 defines a set as items that are similar and complementary to each other and worth more together than separately. Where pieces of a set are disposed of to the same person, or to connected persons, the £6,000 limit applies to all of the set collectively and not to each member individually. A matched necklace and earrings, a graduated suite of rings or a full canteen of flatware is one chattel for this purpose, even if it goes into the parcel as several separate objects.
HS293 makes the point with a 32-piece antique chess set sold piece by piece at £1,000 each. Treated as 32 chattels, every disposal is under £6,000 and exempt. Treated as a set, the whole £32,000 is in scope. If a genuine set is going into a scrap parcel and the numbers are meaningful, take advice before you post it rather than after.
The income side: when selling scrap becomes trading
Selling your own possessions is not a trade. Buying gold in order to sell it on at a profit can be. HMRC applies no single test; the Business Income Manual at BIM20205 sets out nine badges of trade that are weighed together.
- Profit-seeking motive
- The number of transactions
- The nature of the asset
- Existence of similar trading transactions or interests
- Changes to the asset
- The way the sale was carried out
- The source of finance
- Interval of time between purchase and sale
- Method of acquisition
HMRC is explicit that the presence or absence of a particular badge is unlikely, by itself, to provide a conclusive answer; what matters is the overall impression. One inherited estate lot is not a trade. Buying jewellery at car boot sales most weekends and posting it to a refiner every month looks a great deal more like one. If you have crossed into trading, the profit is Income Tax and National Insurance territory rather than CGT, and a £1,000 trading allowance covers small amounts of trading income before a return is needed.
What about VAT?
VAT applies to supplies made in the course of a business. A private individual selling their own possessions is not making one, so VAT does not arise on a household scrap sale. Separately, investment gold, which HMRC defines as gold of a purity not less than 995 thousandths in bar or wafer form of a weight accepted by the bullion markets, together with qualifying coins minted after 1800, is an exempt supply in its own right. Neither route puts VAT on the money you receive for a bag of broken chains.
Keep the paperwork anyway
Even where nothing is reportable, keep the record. HMRC’s record-keeping guidance asks for receipts, bills and invoices showing the date and the amount, contracts for buying and selling the asset, and copies of any valuations, kept for at least a year after the Self Assessment deadline. A written, itemised offer showing each item, the purity it assayed at, its weight and the rate used does most of that in a single document.
It also does something less obvious. If you ever need to show that a sale was a disposal of personal possessions rather than trading stock, an itemised record of what went into the parcel is the evidence. That is a reason to ask for one whether or not you go on to accept the offer.
Sources
- HS293, personal possessions and Capital Gains Tax 2026: gov.uk HS293 (2026)
- Capital Gains Tax on personal possessions: gov.uk/capital-gains-tax-personal-possessions
- HMRC Business Income Manual BIM20205, badges of trade: gov.uk/hmrc-internal-manuals/business-income-manual/bim20205
- Tax-free allowances on property and trading income: gov.uk trading allowance
- Capital Gains Tax record keeping: gov.uk/capital-gains-tax/records
Common questions
Do I have to tell HMRC I sold scrap gold?
Not unless there is something to report. HS293 sets the trigger for personal possessions at disposal proceeds of more than £6,000 for the item. Below that, and where the sale produces no gain, no CGT reporting arises for the sale itself.
Does it matter that the whole parcel came to more than £6,000?
The threshold is applied per item, not per parcel, unless the pieces form a set sold to the same or connected buyers. A large mixed lot of individually modest items is a series of small disposals, and an itemised valuation is what shows that.
I inherited the jewellery. Does that change the answer?
Your base cost is the market value at the date of death rather than what the deceased paid for it, so a scrap figure at or below that produces no gain. If you are the executor rather than the beneficiary, see how estates are taxed on jewellery they sell.
Can GoldPaid advise on my tax position?
No. We buy metal and we are not tax advisers. What we can give you is a written, itemised record of exactly what was sold, at what purity, weight and rate, which is what HMRC guidance asks you to keep.