Short answer: the Victoria Cross
The Victoria Cross, usually called the VC, is Britain’s highest military decoration for gallantry in the face of the enemy. It is the award most people mean when they ask about the most prestigious British military decoration. It is a bronze cross, suspended from a crimson ribbon, and it is awarded for acts of valour.
“Most prestigious” depends on how you define it. The VC is the highest award for courage in action. The Order of the Garter is a more senior honour, but it is an order of chivalry rather than a gallantry award, so it is not usually the answer to this question.
When and why the Victoria Cross was created
The VC was created in 1856, during the Crimean War. Queen Victoria signed the Royal Warrant establishing it on 29 January 1856. Before then, British awards for bravery were uneven, and senior officers were often rewarded in ways that junior soldiers were not. The VC was meant to recognise courage across all ranks.
Since 1856 the VC has been awarded about 1,350 times, which makes it scarce but not the rarest military medal by count. Its history includes awards in many wars and campaigns, and it has been given to men of many backgrounds.
Who can receive it
The VC can be awarded to members of the British armed forces of any rank, and to members of Commonwealth forces in some periods. Civilians under military command have also received it. The award is made for acts of valour in the presence of the enemy, and it is presented by the monarch.
Awards are made on the recommendation of those in command, and they are published in The London Gazette.
The George Cross and other top British awards
The George Cross is the closest equivalent for gallantry that is not in the face of the enemy. It was created in 1940 and is usually given for acts of courage in situations where the danger was not from an enemy, such as bomb disposal or rescue work. The VC and the George Cross are the two highest gallantry awards in the British honours system.
Other awards recognise different things. The Distinguished Service Order recognises leadership in action, particularly for officers. Campaign medals recognise service in a particular war or operation, and they do not rank as gallantry awards in the same way. The British military medals list sets out these groups in more detail.
Why the VC is hard to collect
A genuine VC is rarely offered for sale, and most collectors will never see one. Replicas and copies are widely available, and they are often sold to people who do not know the difference. Genuine awards have been sold at auction, but a sale does not prove authenticity, and provenance and documentation matter a great deal.
If you come across a VC or a claim that one is genuine, read Victoria Cross replicas and fakes before you spend any money.
Related reading
For the collecting basics that apply to medals and other items, see the British and Commonwealth militaria collecting guide. Ceremonial dress often carries medals, so the article on British ceremonial uniforms is a useful companion.