Wine and tax : the not so perfect pairing
Whether you are growing your wine cellar for the pleasure of drinking it , or for less heady investment reasons , it is important to be aware of key tax and succession planning considerations .
Waste not , want not For capital gains tax ( CGT ) purposes wine is a chattel , and if sold ( or given away ) during the owner ’ s lifetime , may be subject to CGT unless exempt as a ‘ wasting asset ’ - an asset with a predictable life of less than 50 years at the time of acquisition . HMRC are likely to argue that a fine wine is not a wasting asset if capable of withstanding significant ageing and remaining drinkable after 50 years . CGT may therefore be payable if the gain exceeds £ 6,000 .
Tax considerations aside , the key will be identifying who gets what . A gift to your executors , combined with a letter of wishes you can update with each new bottle , will ensure maximum flexibility and ( hopefully ) minimum argument .
Ensuring ‘ clarety ’ Our top tips when dealing with your cellar are :
Keep detailed records of the wine e . g . date of purchase , vintage , terroir , provenance and storage conditions
Ensure your wine collection is covered in your Will Consider which bottles are worth drinking yourself now to avoid the complication !
I give my fine wine to … Whether making a birthday gift of a bottle whose vintage matches the recipient , or passing the contents of your much-loved cellar through your Will , wine will , like any other asset , be subject to inheritance tax .
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