From April 6, the British government will move to reduce the deficit through a number of measures, including very significant changes to capital gains tax thresholds. However, investors may find that “wasting chattel” investments could be a worthwhile solution to this.
From the new financial year 2023-2024, the threshold for paying capital gains tax (CGT) will be slashed, from £12,300 to £6,000 this year, and then again to £3,000 the following year – a full 75% fall. This added tax burden will inevitably eat into investor returns. However, the category of investments known as “wasting chattel” is exempt from CGT altogether, meaning that any gains made on these investments will allow investors to keep more of their profits.
Wasting chattel investments are assets with a predictable useful life not exceeding 50 years and can include things such as art, furniture, vehicles, and most importantly, fine wine. These may provide investors with a tax-efficient way to profit.
If you’re looking to balance out tax losses and protect your portfolio against inflation, then allocating more of your portfolio to wasting chattels may be a smart move. Collectible assets such as fine wine are often inflation-resistant and have a long history of good returns. They can therefore provide a much-needed buffer against the current economic environment; helping ensure the long-term success of your portfolio and the security of your financial well-being.
In these difficult economic times, adaptability is paramount, and it is essential for investors and portfolio managers to remain flexible by considering all investment tools and vehicles. Wasting chattels kick back against the upcoming tax hits, and can be an excellent option.
If this sounds like something of interest to you, why not schedule a consultation with WineCap? Our wine investment experts would be only too happy to guide you through the process.
