Silver Coins vs Silver Bars: Which Should You Buy in the UK?

When you decide to buy physical silver in the United Kingdom, the next question is what form it should take. Silver coins and silver bars both contain the same underlying metal, but they differ in ways that affect your total cost, tax liability, and ease of resale. Before purchasing either, check the current spot price on our live tracker so you can evaluate dealer premiums accurately.

Understanding Premiums: What You Pay Above Spot

The premium is the amount you pay above the silver spot price, covering refining, minting, distribution, and dealer margin. Silver bars generally carry lower premiums. A one-kilogram bar from a recognised refiner such as PAMP Suisse or Umicore typically sells at 8 to 15 per cent above spot inclusive of VAT, while 5 kg bars may be just 5 to 10 per cent over spot.

Silver coins carry higher premiums due to additional manufacturing costs. A one-ounce Silver Britannia typically sells at 25 to 40 per cent above spot inclusive of VAT. Foreign coins such as the Canadian Maple Leaf carry similar premiums in the UK. At first glance bars appear the obvious choice, but taxation dramatically changes the calculation for certain coins.

The CGT Advantage of UK Legal Tender Coins

The most significant advantage coins hold over bars is capital gains tax treatment. Silver coins qualifying as UK legal tender are exempt from CGT under HMRC rules, meaning any profit is entirely tax-free regardless of amount.

The Silver Britannia, with a face value of two pounds, is the most popular CGT-exempt coin. Other Royal Mint coins with legal tender status also qualify. Silver bars are not legal tender and are subject to CGT when sold at a profit. The annual exempt amount is 3,000 pounds, with gains above that taxed at 18 or 24 per cent.

Consider this example: buying 10,000 pounds' worth of silver bars and selling when the value doubles to 20,000 pounds creates a 10,000 pound gain. After the 3,000 pound exemption, CGT on 7,000 pounds could cost 1,260 to 1,680 pounds. The same gain on Britannias would be entirely tax-free. This exemption can more than offset the higher purchase premium.

The Silver Britannia: Britain's Flagship Silver Coin

First issued in 1997, the one-ounce 999 fine silver Britannia features the iconic Britannia design on the reverse and the monarch's portrait on the obverse. Since 2021, the Royal Mint has incorporated advanced security features including a latent image and micro-text, making counterfeits significantly harder to produce.

Beyond CGT exemption, the Britannia benefits from strong international recognition alongside the American Eagle and Canadian Maple Leaf. Virtually every bullion dealer in the UK and most international dealers will buy Britannias at competitive prices. The one-ounce version is by far the most popular, with annual mintage in the millions ensuring a deep secondary market. Dealer buyback prices typically fall within 3 to 5 per cent of the current spot price for Britannias in good condition, making them the most liquid physical silver product available to UK buyers.

Storage and Practical Considerations

Silver is bulky compared with gold. A thousand pounds' worth weighs several kilograms. Bars are more space-efficient, stacking neatly in safes or vaults. Coins are less space-efficient due to their circular shape and protective capsules, but they offer superior divisibility. You can sell individual coins without cutting into a bar.

For home storage, a quality bolted safe is the minimum standard, and home insurance may need updating. Professional vault storage typically costs 0.5 to 1.5 per cent of value annually with full insurance and allocated storage.

Resale Value and Market Liquidity

Not all silver products are equal at resale. Here is how they compare:

• Royal Mint Britannias command the best buyback prices, typically within 3 to 5 per cent of spot
• LBMA-accredited bars from recognised refiners sell easily at 3 to 6 per cent below spot
• Generic rounds from lesser-known mints face wider spreads of 5 to 10 per cent
• Damaged or tarnished silver sells at a discount
• During high-demand periods, premiums and buyback prices both increase

For UK investors building long-term positions, the ideal strategy often combines CGT-free Britannia coins as the core holding with larger bars for cost-efficient bulk purchases. This blended approach balances lower premiums with powerful tax advantages across different holding periods.