Wasting assets: wines and spirits
TCGA92/S44 and TCGA92/S45
HMRC’s view of the treatment of bottled wines and spirits was first set out in Tax Bulletin 42 published in August 1999. This guidance focusses on the availability of the chattels exemption, TCGA92/S262, and the wasting asset exemption, TCGA92/S45(1).
Bottled wines and spirits are chattels (tangible moveable property) so disposals for £6,000 or less will be exempt under TCGA92/S262, see CG76573. If the bottles are disposed of to the same person then they may form a set. This would depend 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
See CG76631 onwards for more details.
Wasting asset exemption
A wasting asset is an asset with a predictable life not exceeding fifty years at the time when it was acquired, TCGA92/S44(1). Whilst this definition would clearly apply to cheap table wine which may turn to vinegar within a relatively short period, even in unopened bottles, our view is that it would certainly not apply to port and other fortified wines which are generally recognised to have a very long storage life.
Between these extremes, there are a number of fine wines which are quite drinkable after a substantial period although of course the taste alters over that time. With these the basic consideration, in our view, is whether the wine has turned to vinegar or has merely matured. Of course in practice, most wine is drunk well below the age of 50 years and in that sense it is very difficult to consider the issue in isolation. However, where the facts justify it, we would normally contend that wine is not a wasting asset if it appears to be fine wine which not unusually is kept (or some samples of which are kept) for substantial periods sometimes well in excess of 50 years.