A Vintage Strategy: Is Wine Investment Tax Efficient?

17 April 2025

Accounting & Compliance, Ambitious Startups, Reducing Tax, Structuring a Business

Thinking about investing in wine?

Its potential for capital growth can certainly make it an attractive option.

However there are tax implications to consider that come with holding wine as an investment.

Understanding these tax considerations is crucial for maximising returns and ensuring compliance with tax authorities.

Holding wine as an investment

When purchased as an investment, wine is usually purchased ‘in bond’ meaning that the crate isn’t delivered to your home to drink but instead held within a bonded warehouse certified by HMRC.

That way VAT or any customs duties are not payable at the point of purchase.

The VAT and duty is deferred until a case if delivered to its final destination.

If the wine’s value has increased over this time, then you’ll pay VAT and customs duties on the original purchase price not the current market value.

If you choose to sell your wine via a broker whilst it’s still in bond, then you’ll never need to pay any VAT or customs duties.

Buying in bond is also standard if you’re buying wine ‘en primeur’ i.e. purchasing wine futures before it’s bottled and still in the barrel.

Is Wine Subject to Tax?

Before we can consider if you’d need to pay any tax on the sale of wine, we first need to decide if your wine sales activity would constitute a trade.

In practice, this is unlikely, as the majority of those investing in wine are doing so to hold it over a long period of time and are not selling with any great frequency.

To determine if a trading activity is present HMRC would consider the ‘Badges of Trade’

If your sales in wine are deemed to be a trading activity, then any sales will be taxable to income tax and national insurance (if held personally).

For those who aren’t trading, capital gains tax (“CGT”) may be applicable to the sale of any investment in wine.

There are two categories that your wine investment may fall into:

Wasting Asset Exemption

A wasting asset is any asset with a predictable remaining life of less than 50 years, at the time it is acquired.

Wasting assets are exempt from CGT.

Whilst HMRC agree that cheaper wines that turn into vinegar in a relatively short period of time are wasting assets, this exemption would not apply to port of other investment grade fortified wines that have a storage life over 50 years.

It’s important to distinguish that a wine’s remaining life is measured from its purchase date, not its creation; for example, a 1940’s vintage bottle of wine that is clearly over 50 years old now, but is only expected to remain drinkable for another 10 years, will be a wasting asset and thus exempt from CGT on sale.

Chattels Exemption

For those bottles of wine that aren’t considered a wasting asset, the chattels exemption may be available.

Broadly this means that bottles disposed of for under £6,000 will be exempt from CGT.

If individual bottles of less than £6,000 are sold to the same buyer and their collective value is over £6,000, then they may be considered a set and so wouldn’t benefit from the chattels exemption.

HMRC would judge this on the facts of the case, including:

whether the bottles are “similar and complementary” – which would require the wine in them to have been produced from the same vineyard in the same vintage year, and;
whether the bottles are of greater worth when sold collectively than when sold individually.

Can my limited company invest in wine?

It can indeed — the rules on wasting assets and chattels apply in the same way.

However, any wine sales that don’t qualify for these exemptions will be subject to corporation tax (at rates between 19% and 26.5%, depending on profits) rather than capital gains tax (18% or 24%, depending on your personal tax band).

There are likely to be costs associated with holding wine in bond, for example storage costs, insurance and professional valuation fees, all of which may be tax deductible if your wine portfolio is held within a limited company.

Summary

There is a common misconception that wine is always exempt from tax on a sale, which as you can see may not always be the case for fine wines with a long storage life.

The CGT rules surrounding wasting assets and chattels can be complex to navigate in certain situations and you’ll want to ensure your investment in wine is structured as efficiently as possible to maximise tax relief on associated costs.

We recommend that you always seek advice before making an investment or a sale.

Get In Touch With Us

At Friend & Grant, we help individuals and business owners structure their investments in the most tax-efficient way — whether it’s in fine wine or other valuable assets.

To find out more about how we can help you save tax why not contact us to arrange a free initial meeting.