No. If you are VAT-registered and you sell scrap gold to another VAT-registered business for a price that does not exceed the open market value of the gold it contains, you must not charge VAT on it. The buyer accounts for the VAT instead, under the Special Accounting Scheme for gold in section 11 of VAT Notice 701/21. This is compulsory, not a scheme you opt into, and getting it wrong in either direction is a real assessment risk.

Buying scrap over the counter from a member of the public is different again: there is no VAT on that purchase at all, because the person selling to you is not VAT-registered and cannot charge it.

The three situations you actually encounter

Most of the confusion comes from treating "scrap gold" as one transaction type. It is three.

What you're doing Who the other party is VAT treatment
Buying broken chain, odd earrings, old rings over the counter Private individual No VAT. Nothing to reclaim, nothing to charge. Keep the purchase record anyway.
Selling the accumulated lot to a refiner or bullion dealer at metal value VAT-registered business Reverse charge. You do not charge VAT. The buyer accounts for it.
Selling a piece on as jewellery, above metal value Anyone Not scrap. Margin scheme or standard-rated, depending on how you bought it.

The line that matters is the third row. The moment the price is set by the piece rather than by the gram, you are outside the gold scheme.

What "at metal value" means in HMRC's words

Notice 701/21 says the Special Accounting Scheme must be used for, among other things, supplies of goods containing gold where the amount paid for the supply, excluding VAT, does not exceed the open market value of the gold contained in the goods. HMRC's own text confirms the scheme covers "supplies of scrap (including live scrap - scrapped jewellery, broken jewellery, watch cases, cigarette cases and so on)".

So the test is not "is this item broken". It is "did the price you agreed exceed the value of the metal inside it". A 9ct chain bought at £X per gram against the day's fix is at metal value. A Victorian bangle you paid a premium for because it is a Victorian bangle is not, even if it is dented.

The scheme also covers fine gold of a purity of 995 thousandths or higher, gold grain, gold coins other than those traded under the margin scheme, and the services of treating or processing goods to make fine gold, gold grain or gold coins. Supplies of dental gold, gold targets and gold slugs are excluded.

It applies between VAT-registered traders only

Section 11.1 is explicit that the scheme is for transactions between VAT-registered traders. If the buyer is not VAT-registered, the reverse charge cannot apply and the ordinary rules do. In practice this rarely bites, because refiners and bullion dealers are registered - but confirm and record the buyer's VAT number before you invoice. Do not assume.

What your invoice must say

Notice 701/21 requires the invoice to state the output tax that the buyer must account for. HMRC's published wording is:

£...... output tax on this supply of gold to be accounted for to HM Revenue and Customs by the buyer

The amount must be shown clearly, but it must not be included in the total VAT charged on the invoice. The invoice should also record the time of supply, the weight and purity of the gold, the number of items, the fix price used, the buyer's details, and the invoice date and number.

That last cluster is the bit dealers skip. Weight, fineness and the fix price you priced against are what make the "at metal value" claim auditable two years later. Without them you are asking an inspector to take your word for it.

How the buyer accounts for it

If you are on the receiving end - you buy scrap or fine gold from another dealer - the mechanics are:

  • Box 1: include the VAT due on the gold you have bought under the scheme
  • Box 4: claim the same VAT as input tax, subject to the normal recovery rules
  • Box 6: enter the VAT-exclusive value of the gold you bought and sold

For a fully taxable business this nets to nil in cash terms, which is exactly the point - the scheme exists to remove the cash from the chain, not to change the tax take.

You cannot use the margin scheme instead

This is the single most common error. VAT Notice 718, paragraph 2.8, says you must not use a margin scheme to account for the sale of precious metals, investment gold or precious stones.

So the tempting move - "I bought it from the public with no VAT, so I'll pay VAT on my margin" - is not available for gold sold at metal value. The margin scheme is for second-hand goods sold as goods. Metal sold as metal is a different regime, and the two do not overlap.

The same notice bars unmounted precious stones. If you break a ring and sell the stone loose, the stone is outside the margin scheme too.

Silver, platinum and palladium

The Special Accounting Scheme in Notice 701/21 is a gold scheme. It does not extend to silver, platinum or palladium.

That leaves an awkward gap: the margin scheme is barred for all precious metals, and the gold reverse charge only covers gold. In practice a sale of scrap silver between two VAT-registered businesses is normally standard-rated in the ordinary way, with output VAT charged and the buyer reclaiming it. We have not found a published HMRC notice that states this as plainly as the gold position is stated, so treat this paragraph as the point where you stop reading and ring your accountant, particularly if silver is a material part of your turnover.

What to keep on file

Whatever your bookkeeping looks like, for every scrap transaction you want:

  • Date, weight, and fineness by carat band
  • The metal price you priced against, and when it was taken
  • The counterparty - name and address for over-the-counter buys, VAT number for trade sales
  • Photographs of the lot before it goes
  • The invoice, with the reverse charge wording where it applies

Notice 701/21 requires records to be kept for at least six years from the date of the transaction. Your AML obligations run on a separate five-year clock. Keep to six and you satisfy both.

If you want to sanity-check a counter price against the day's metal value, our scrap gold calculator does the per-carat arithmetic.

A note on cash

Scrap buying and cash go together, and cash brings the Money Laundering Regulations with it. Since 30 June 2026 the high value dealer threshold is a flat £10,000 in sterling rather than €10,000, and it counts linked payments, not just single ones. If you take cash for scrap, read our piece on high value dealer registration before your next big counter buy.

Sources

This is general information, not tax advice. VAT on precious metals turns on the specific facts of each transaction, and the consequences of getting it wrong fall on you, not on us. Confirm your treatment with your accountant or a VAT specialist before you change how you invoice, and check the notices directly - HMRC updates them without much fanfare.

WatchCRM decides the VAT treatment at intake rather than at the VAT return, so a scrap lot is flagged as reverse charge the moment you weigh it in and the invoice carries the right wording automatically. It keeps the weight, fineness and fix price against the record, which is what you need if anyone ever asks.