CGT: investors seek out wine

Sales and inquiries about high-end wine, especially Bordeaux, have shot up after accountants started to advice sophisticated clients to seek out alternative investments, which are free from CGT.

Nearly all fine wine is free from CGT, because it is classed by the taxman as a "wasting asset", something that will not have a "useful life" beyond 50 years. Other wasting assets include race horses and classic cars.

Most gold coins, deemed by the tax man to be legal tender, are also free from CGT and some bullion dealers claim to have seen a rush of sales, with a waiting list for Britannia gold coins up until August.

Top end wine merchants have already been enjoying a very successful few months thanks to the 2009 vintage being classed as one of the best in the last few decades. It has only recently been released for sale "en primeur", allowing buyers to purchase the wine before it has even been bottled.

But some said the increase in customers' requests followed the announcement from the Coalition Government that it intended to increase the CGT rate from 18 per cent to close to 40 per cent or even 50 per cent.

Paula Golding, the managing director of Premier Crus, which invests wine for clients, said inquiries from new clients in the last two weeks were up 35 per cent on last year, even stripping out the effect of the stellar 2009 vintage.

"The first thing they ask, is "are you sure this is free from tax?". Nearly every client says they are fed up with the poor rates they are getting on other savings products and the fact they are taxed.

"Most decide they are prepared to take the risk, considering all the other investment options."

Tom Jenkins the broking manager at Justerini & Brooks, one of the oldest wine merchants in the country said that there was "unprecedented high demand for fine wines" at the moment, though it was difficult to work out how much of that was down to Asian investors snapping up Bordeaux and how much was from British buyers.

He added: "If CGT rates do go up to 40 per cent or 50 per cent it will undoubtedly encourage more investors to look at fine wines."

Accountants have said they have been inundated by worried clients asking about the proposed changes, which have been pushed through by the Liberal Democrat members of the Coalition.

Chris Cole, senior client partner at Towry, a wealth advisory firm, said: "We have seen a huge increase in client inquiries. But we are very nervous about advising people to invest in certain asset classes until we know what is going to come out of the Budget.

"They might be piling into something that is already attracting a premium, only to find it is suddenly subject to CGT."

Since the Daily Telegraph launched a campaign to stop the changes hitting people who have saved for their retirement, thousands of readers have written in support.

According to Livex, a wine trading exchange, the price of fine wine has increased by 24 per cent so far this year, far outstripping any gains on the stock or property markets.

Invest in a fine wine with the 2009 Bordeaux En Primeur collection at Telegraph Wine