{"id":106972,"date":"2025-08-30T15:41:31","date_gmt":"2025-08-30T15:41:31","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/106972\/"},"modified":"2025-08-30T15:41:31","modified_gmt":"2025-08-30T15:41:31","slug":"how-fine-wine-is-helping-farmers-avoid-paying-labours-punitive-inheritance-tax-on-their-estates","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/106972\/","title":{"rendered":"How FINE WINE is helping farmers avoid paying Labour’s punitive inheritance tax on their estates"},"content":{"rendered":"

Wine merchant says customers who are farmers have jumped by 32%\u00a0<\/p>\n

By MIKE SHEEN, BUSINESS EDITOR<\/a> <\/a> <\/p>\n

Updated: 02:00 EDT, 30 August 2025 <\/p>\n

A growing number of farmers could be turning to investment-grade wine to help offset the impact of crushing inheritance tax<\/a> changes announced by Rachel Reeves.<\/p>\n

Moncharm Wine Traders, a London-based merchant, claims it has seen a 32 per cent increase in business from farming clients since last November after the Chancellor revealed plans to cap agricultural and business property relief at \u00a31million.<\/p>\n

Changes to IHT, particularly reforms to Agricultural Property Relief (APR) are hitting farm owners hard, sparking protests across the country.<\/p>\n

Over 6,000 agriculture, forestry and fishing business closed or were sold since the changes were announced, according to Office for National Statistics data.<\/p>\n

APR mitigates IHT on farms to help operators pass on the family business to the next generation.<\/p>\n

From April 2026, IHT relief over the value of \u00a31million on qualifying agricultural and business property will be cut to 50 per cent, from 100 per cent\u00a0 \u2013 an effective tax rate of 20 per cent.<\/p>\n

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Wine’s tax efficiency is driven by Britain’s secure ‘bonding’ system, which sees wine stored in a HMRC-approved bonded warehouse with duty and VAT deferred until it leaves<\/p>\n

According to wealth manager St. James’s Place, a farm-owning couple entitled to APR, and the full nil-rate band and residence nil-rate band allowances<\/a>, will need to consider IHT planning if their assets including agricultural property exceed \u00a33million.<\/p>\n

Moncharm says recent farmer demand for investment grade wine derives from its ‘tax-efficient’ status, as well as the relatively low volatility of the asset class.<\/p>\n

Its tax efficiency is driven by Britain’s secure ‘bonding’ system<\/a>, which sees wine stored in a HM Revenue & Customs-approved bonded warehouse, with duty and VAT deferred until it leaves the warehouse.<\/p>\n

This makes the investment effectively tax free, and the assets secure and safe, at the point of purchase.<\/p>\n

It of course has a major drawback \u2013 you cannot take receipt of the wine without incurring tax.<\/p>\n

HMRC also considers fine wine a ‘wasting asset’, which means that no capital gains tax<\/a> is due when the asset is sold.<\/p>\n

John, a farmer from Llandovery in Wales, and a client of Moncharm, said: ‘It feels like farmers were a big target last year, but we’re not alone.<\/p>\n

‘I [invest] in wine because farming is a job that becomes a way of life and requires me to have hands-off investments.<\/p>\n

‘I like owning my assets, and wine has become more important of late, due to the tax advantages and changes.’<\/p>\n

Callum Woodcock, chief executive at investment platform WineFi, told This is Money his business had seen greater investor interest since last year’s budget citing a ‘tax-efficient alternative as their reason for investing’.<\/p>\n

He added: ‘This is an interesting move, as ‘typical’ wine investors will usually have an existing interest in wine as a consumable or collectible, rather than just an asset class. We are seeing a whole new demographic enter the market driven by an entirely different motivation – tax-efficiency.’<\/p>\n

Tom Gearing, chief executive at investment platform Cult Wines, is more skeptical.\u00a0<\/p>\n

He said: ‘We have not seen any discernible pattern in the user data to suggest that more UK-based farmers are investing in wine as a result of this potential IHT tax change.\u00a0<\/p>\n

‘Historically, wine has been an attractive asset class for those who are considering wealth preservation and inheritance for their children, mainly due to the long-term capital appreciation of fine wine, the flexibility of ownership, and the fact it’s free from CGT.’<\/p>\n

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\n How FINE WINE is helping farmers avoid paying Labour’s punitive inheritance tax on their estates<\/p>\n