Does fine wine offer tax benefits for investors? With comments in the press today about Chancellor Rishi Sunak’s plans to address the growing Covid debt through a number of tax strategies in the near future. Understanding where there may be tax advantageous investments, like fine wine, will be increasingly valuable.
We know it’s coming – just not when. The cost of dealing with the Covid Pandemic will have to be repaid and it’s not over yet. Quite rightly the Chancellor chose not to commence any form of repayment in the March 2021 Budget and Tax Day this year revealed nothing unexpected or radical in terms of pay-back at that time.
The IMF Deputy Director of Fiscal Affairs, Paolo Mauro is quoted in press on the 27th July 2021 stating that “Governments could consider higher taxes on property, capital gains and inheritance. One specific option would be a COVID-19 recovery contribution – a surcharge on personal tax or corporate income tax.” We are yet to discover what Rishi’s plan will be but, for certain, there will be a necessary price to pay.
With the Government’s Furlough Scheme now tapering and due to finish (on current plans) at the end of September, the reality of the impact on employment, consumer confidence and growth will be fully exposed. The Bank of England has forecast growth at 7.6% to the end of the year and the fastest increase in the rate of GDP in 80 years has been reported.
Should this growth be sustained what is to stop the Chancellor from putting the necessary measures in place to start recouping the Covid costs? Tax is expected to be a key strategy and Capital Gains Tax (CGT) and Inheritance Tax (IHT) have been identified as obvious targets.
Understanding which assets are currently exempt from CGT, and likely to remain so in any future new tax policy, is valuable insight and investors should be seeking expert advice from their financial advisors.
HMRC’s classification of fine wine as a ‘Wasting Asset’ means that, subject to personal circumstances, any gains made from sale are not subject to CGT. Furthermore, whilst not IHT exempt, fine wine can be used in estate planning. There are also considerations in regards to Income Tax and benefits when investing in a fine wine company that has qualified for the Government’s Enterprise Investment Scheme.
For more information on the current tax treatment of fine wine, get your copy of our specialist report: The Tax Treatment of Fine Wine in 2021, by completing the details below and consult your Tax advisor. For details on which wine investments are currently offering strong growth potential speak to a member of our expert team on 0203 384 2262.