Is wine free of Capital Gains Tax?
Although there is a widespread belief that wine is exempt from Capital Gains Tax (CGT) because it is a wasting asset, this is not entirely the case. A wasting asset is defined as something with an expected useful life of less than 50 years. Thus clearly most wines are wasting assets but not some of those most likely to accrue in value over time. If you buy Château Margaux 2000 in 2006 it is likely to be still drinkable in 2056, so may well be subject to CGT. However, if you buy a case of Mouton-Rothschild 1945 now it is likely to be considered a wasting asset as there is a good chance that it will be undrinkable in 50 years time. It would not, however, have been considered a wasting asset if you had bought it in 1947. The normal Inland Revenue rule on this is that a gain ‘arising from the disposal of investments held for the purposes of a registered pension scheme is exempt from Capital Gains Tax’. Only certain property schemes will attract CGT.
