TAX - Wine Tax Benefits
The tax treatment of wine is an unusual one and based on the assumption that wine is bought predominantly for consumption and that left for extended periods of time would become undrinkable. For this reason wine falls under the 50 Year Rule and is deemed to be a Wasting Asset by HMRC.
Due to this, fine wine is regarded as one of the last remaining tax free areas where private individuals are not taxed on gains. Although this can be open to interpretation the tax treatment depends largely on how the wine is bought and sold.
Due to individual tax positions and constant changes within tax legislation we suggest you speak with your personal tax consultant or accountant regarding this and your own tax circumstances.
VAT and Duty
All wine is subject to Import Duty and VAT, however the liability for this remains suspended whilst the wine is held under bond in a HMRC regulated warehouse. Should you choose to remove your wine from bond, the Duty and VAT will become payable at the prevailing HMRC rate at the time of removal. This is charged directly to the owner by the bonded warehouse on behalf of HMRC before the wine can be released.
Wine sold in bond is not subject to Duty or VAT as liability for this remains suspended, once sold the liability for such passes to the buyer or new owner.
Import Duty is calculated per litre, which may vary according to HMRC rates at the time of removal and VAT is based on the purchase price of the wine not current value.