What is the tax on wine investments?
If managed correctly, wine investment should in most cases be tax free. However, it is always good to know what caveats to be aware of when making your decision.
Please note that we are not tax advisors, so always seek professional tax advice when required.
All wine is subject to VAT and Import duty, however this is not charged on wine that is already stored in a bonded warehouse. VAT and duty is only payable by the person who eventually takes the wine out of bond.
In summary, as long as a wine investor keeps all of their wine in bond; they will not pay any VAT on the purchase or the sale.
Income tax on fine wine only applies to individuals who actively and regularly trade at a high volume. People that trade wine this way are able to offset any losses against profits and/or any other income.
Most private wine investors will never be viewed as traders, in fact only high profile individuals who publicly declare their interest in wine will realistically need to take income tax into consideration.
There are many fine wines that could be subjected to capital gains tax but there are just as many that aren’t. So long as the wine in question is classed as a wasting asset, then no capital gains tax is charged.
The term wasting asset applies to any wine that has an expected shelf life of less than 50 years, so the simple way to make sure that a wine portfolio is as tax efficient as possible is to hold on to no individual bottle or case for longer than 50 years.
Fine Wine Investment carries no special Inheritance tax advantages but can be used as part of a potentially exempt transfer. This means that if the wine portfolio is handed over at least seven years before your death, the beneficiary receives the same tax advantages that you would have.
The tax rate on potentially exempt transfers works on a sliding scale that begins with thirty two per cent being liable after year three, and ends with zero percent being liable after year seven.
HOW CAN WE HELP?
Looking to learn more about how and what to buy? We will be happy to discuss your requirements with you and hopefully get you started. Get in touch to find out more.
Looking to sell your current wine collection? We can help you sell your wine or we could even be interested in buying your wine from you directly. Fill out our form and we will aim to get back to you within 48 hours.
Looking for guidance with your pre-existing portfolio? We are happy to help even if your wine has been purchased elsewhere, so get in touch to see how we can assist.
WHY INVEST IN WINE?
Fine wine has a proven track record of providing safe and reliable returns even in the harshest of economic climates. Due to its relative stability in comparison to the volatile equity markets, most investors choose to hold their wines for the medium to long term to achieve the optimum return.
WANT TO SELL YOUR WINE?
We can help you sell your fine wine collection or we may even be interested in buying it from you directly.