We have been analysing the recent Labour election win and what it might mean to our clients holding cask whisky portfolios, from a taxation perspective.
Please understand that this is in no way a political statement, rather a forward thinking analysis of what may happen in the future, based on the information at hand.
Labour’s manifesto pledges:
• Income Tax
• National Insurance (NI)
• Value Added Tax (VAT)
‘Labour will not increase Income Tax, National Insurance or VAT’
Wonderful news for everyone of course however, two taxes have specifically not been mentioned:
• Capital Gains Tax (CGT)
• Inheritance Tax (IHT)
Although Income Tax, NI and VAT look set to remain unchanged, clearly something has to pay for the proposed spending plans.
While there have been no explicit direct references to CGT and IHT, speculation is rife that there will be a ‘tax raid’ in these areas.
Multiple media outlets are advocating that there will be significant increases in the rates of CGT and IHT in order to significantly raise revenue.
Speculation is that CGT bands could align with those of income tax. (20% / 40% / 45%) and IHT rates and bands will be changed, again to raise further revenue.
What this means to you in terms of your cask portfolio:
In real terms, this means that the CGT payable on traditional (non exempt) investments and commodities could potentially double.
With CGT for higher rate tax payers at 20% (28% rental properties) this is a cause for concern.
The CGT allowance has reduced from £15,300 to £3,000 in just 27 months and this has a huge impact across the board.
Cask whisky, classed as a ‘wasting chattel’ by HMRC is CGT exempt. If CGT rates increase this will have a significant impact on both cask values, plus supply and demand moving forward.
Our Recommendations:
• Review your entire investment portfolio: What assets are tax exempt? What percentage of your portfolio is that? Is that sustainable?
• Strategic Planning: Consider strategic adjustments to your portfolio to maximise available tax advantages
• Stay Informed: Keep up to date with proposed tax changes and their impact on you.
We are essentially here to assist you in navigating through these changes, protecting your assets and optimising your ongoing financial strategies.
By incorporating whisky casks into your investment strategy, you can leverage these tax advantages while enjoying the unique benefits of this alternative asset class. For personalised advice and to explore how whisky investments can fit into your financial plan click the button below.
