Why buy whisky?
Until recently, cask whisky was difficult to purchase. So, unlike equities and bonds, it’s not a ‘crowded trade’. Buying tangible assets gives you more financial security as products can’t go bust like organisations can. It makes buying a cask of whisky a much more attractive option.
What is a cask?
Casks are the industry name for a wooden barrel. Casks are sourced from the US and made from American oak, where they have previously been used to age Bourbon whiskey. Scotch Whisky doesn’t like to mature in newly made casks as it takes on too much flavour from the wood. Bourbon, however, prefers newly made casks.
What is first fill and refill?
Casks can be described as ‘first fill’ or ‘refill’. An American whiskey cask that is being used to mature Scotch for the first time is referred to as ‘first fill’. It becomes a ‘refill’ cask when used for a second or subsequent time.
What is included in a cask purchase?
A cask purchase gives you a package that includes the high-quality oak cask and the New Make Spirit inside. Just as importantly, it secures bonded storage for 3 years to allow the whisky to mature and increase in value. Insurance is also included on the casks to ensure your peace of mind when purchasing.
Purchasing a complete package with Cask Acquisitions Ltd means there are no additional fee’s during the first 3 years.
Will I have to Pay Capital gains Tax?
The good news is that whisky casks are classed as a wasting asset. As such, they’re not subject to capital gains tax. Even though it may be good news that your whisky cask won’t be subject to capital gains when you come to sell it, you may be wondering why your cask is classed as a wasting asset?
Casks are made from wood, which is porous. Some whisky is absorbed by the wood and some is lost to evaporation. An average of 2% of the whisky in a cask is lost each year, which is known as The Angels’ Share. Because of alcohol lost to the Angels’ Share, HMRC classifies whisky spirit in casks as wasting goods, therefore the CGT exemption applies.
What is the Angels Share?
This refers to the amount of whisky lost during the aging process. In order for whisky to properly age, it has to breathe. Anytime you store a liquid in a non-airtight container, you will lose some to evaporation.
However, The Angels’ Share actually plays something of a necessary role in whisky maturation. This process of evaporation is how distilleries eliminate some of the unwanted ingredients of their whiskies. While some “fresh” brews may be clocking in
