I have just spent a few minutes with a spreadsheet calculating my debt to the nation in the event that I want to extract my cellar from storage. It was quite an enlightening exercise
If they are willing to share, I would be interested to know other member's strategies and thoughts towards the timing of clearance from bond. No vulgar details of the sums involved are necessary, I would just like to see reasoned arguments about the pros and cons of storing wine under bond for the long term versus clearing the problem early to ensure the wines can be enjoyed during the austerity of old age.
"The first duty of Port is to be red" Ernest H. Cockburn
My understanding is that the VAT payable on removal from bond is at the prevailing rate at the time of removal, but against the cost when purchased (rather than present value at removal). If VAT and duty are assumed to increase in proportion with inflation, then paying the VAT as late as possible would be a sensible strategy, though of course this has to be balanced against the cost of in-bond vs local storage as well.
If you are extracting to sell to someone else, however, there could be a big difference to the buyer; if you pay the duty and VAT before selling, the additional cost to clear is a % of your original purchase price, whereas if you sell in-bond the buyer will then have to pay VAT on the new (presumably higher) price when clearing.
But when buying wine or port to keep and drink yourself what do you do? Do you pay it now, or do you hope to be able to afford to pay it in your retirement?
"The first duty of Port is to be red" Ernest H. Cockburn
I had a similar revelatory experience as i was preparing our move to SWE.
The solution still eludes me. Add to that there are no similar storage facilities here and i wont be able to build my own proper cellar.
Most likely cull some wines of lesser interest, pay all VAT and duty in one shot, rent a van or pay for professional shipping, buy wine fridges to keep in garage.
If one adheres strictly to EU regs on importing alc. in order to bring unlimited amounts one needs to accompany the booze when crossing the border. This favours the rent a van method.
DRT wrote:But when buying wine or port to keep and drink yourself what do you do? Do you pay it now, or do you hope to be able to afford to pay it in your retirement?
I prefer to leave the stock in-bond when it is to remain at a bonded warehouse as I perceive this to maintain the value better if I ever decide to re-sell (more obvious provenance) and the VAT/duty cost effectively devalues slowly.
That said, it's really a budgeting issue, so it depends on how you prefer to manage your money. In the same way that you shouldn't take out a loan unless you can afford the repayment, in this case the in-bond wine effectively comes with an interest-free loan which you need to budget for at/from time of purchase until you clear the "loan" or sell the goods on.
I like Magnus's solution of selling some low grade stuff to fund the clearing cost of the interesting cases. I don't think I will be crossing borders so might not need a van.
"The first duty of Port is to be red" Ernest H. Cockburn
I notice that the BBC has announced that the UK inflation rate has remained negative for the second month (not deflation, oh no, just inflation being negative), which if it were to continue (which it probably won't), would suggest you should pay off the duty and VAT.
I think the difference in cost will be marginal at worst, so this isn't really a penny-pinching question. It is more about whether or not it is sensible to carry the tax debt into a period where retirement income might cause it to become a problem to free up stuff to drink.
"The first duty of Port is to be red" Ernest H. Cockburn
It is very likely that you will be drinking at a slower rate when old enough to be living on retirement income and will therefore have more wine than time in which to drink it all. This means that you'll be able to sell some excess wine to pay the duty and VAT on the wines you do want to drink.
Or perhaps you need to buy more wine to be sure that you'll have surplus wine to sell.
I keep as much as I can in bond simply to delay the payment of the VAT. While duty is risky at around the rate of inflation, VAT does not (unless the VAT rate changes). The purchase price of the wine and the VAT rate at the time of payment determines the VAT that needs to be paid when withdrawing the wines for consumption. I prefer to pay that duty in 15 years time rather than today, even if it does end up being a bigger proportion of my income then than it would today.
Top Ports in 2023: Taylor 1896 Colheita, b. 2021. A perfect Port.
2024: Niepoort 1900 Colheita, b.1971. A near perfect Port.
