The term wasting and asset don’t seem like they should appear in the same sentence as a good thing. We typically want our assets to appreciate in value – wasting makes it seem like we might potentially be losing out.
However, in terms of Irish whiskey cask investment, being a wasting asset could save you thousands of pounds! Our latest blog post will explain why whiskey casks are in this class, and how it can ultimately benefit you.
The Angel’s Share
Irish whiskey has to be made to very strict specifications – there’s a reason it’s so internationally acclaimed! One of these is the ageing process, where the whisky is matured in oak barrels for a minimum of three years. However, the longer it stays in the barrel, the more valuable it becomes.
This wood absorbs some of the aspects of the distilling process that don’t add to the flavour, while adding its own unique flavour profile to the product. Due to the fact that the barrels are porous, around 2% evaporates into the air each year. Traditionally called “the angel’s share,” this classifies a whiskey cask as a wasting asset.
How much the “angels” drink depends on a few factors, including climate and humidity. Ireland’s moderate temperature and our bonded warehouse’s expert storage ensures that your losses should be minimal.
What Is a Wasting Asset?
Anything that depreciates in value over its lifetime, or has a lifespan of less than fifty years is classed as a wasting asset in UK law. This makes it exempt from Capital Gains Tax (CGT) – the tax of up to 20% that is applied to any asset you sell for a profit (over your tax-free allowance of £12,300 per year).
As most whiskey casks are not designed to last anywhere near fifty years, they’re classed as a wasting asset. So, despite the fact that your investment may have appreciated in value (as quality Irish whiskey tends to do), you still won’t have to pay any CGT.
Other Benefits of Whiskey Casks
Aside from the fact that the market in Irish whiskey is absolutely booming at the moment, and shows no signs of slowing down, investing in whiskey casks also has many other benefits.
Although there are certainly profits to be made from selling whiskey bottles, these also often require location-specific liquor licences, not to mention being subject to CGT and bottling costs. It’s also a much more speculative market – investing in casks is far less of a gamble in our opinion.
At London Cask Co, we also know how important the experience of personally owning your own batch of whiskey is to our investors. You get to see as your asset grows and matures over the years. We can arrange yearly sampling trips where you can witness the magic take place against Ireland’s enchanting backdrop.
If you’re interested in owning Irish whiskey as an investment, please contact one of the team at London Cask Co for an obligation-free consultation. We are not tax experts and always suggest you seek professional advice before anything.