Buying Wine Under Bond and 'En Primeur'

What Does Buying Wine Under Bond Mean? 

Buying wine under bond refers to purchasing wine that is stored in a bonded warehouse before UK duties and taxes are paid. A bonded warehouse is a secure facility licensed by HM Revenue and Customs (HMRC) where goods such as wine can be stored without immediately incurring duty or VAT. 

When you buy wine under bond, you're essentially deferring these taxes until you decide to take the wine out of bond. This option is particularly popular among wine collectors and investors who wish to store their wine for an extended period or resell it without paying the upfront costs of duty and VAT.

How Does Buying Wine Under Bond Work? 

The process of buying wine under bond is straightforward but involves a few key steps: 

Purchase from a Bonded Warehouse or Merchant: To buy wine under bond, you need to purchase from a bonded warehouse or a wine merchant who operates within the bonded system. When you buy wine in bond, you're purchasing it while it is still within the bonded warehouse or sometimes before it's been bottled (in the case of En Primeur).

Storage in Bond: Once purchased, the wine remains in the bonded warehouse. This is a secure facility where the wine is stored under optimal conditions, protecting its quality and value. The bonded warehouse handles the wine with care, ensuring it remains in excellent condition throughout its storage period. 

Deferring Duty and VAT: Since the wine is stored in a bonded warehouse, you do not need to pay duty or VAT at the time of purchase. These taxes are deferred until you decide to remove the wine from the bonded warehouse, at which point they become payable based on the wine's value at that time. 

Removing Wine from Bond: If you choose to remove your wine from the bonded warehouse for personal consumption, you will need to pay the duty and VAT. Alternatively, if you decide to sell the wine while it is still under bond, the transaction can occur without these taxes being paid, potentially making the sale more attractive to buyers who also prefer purchasing wine under bond.

Duty and VAT Calculator

If you decide to remove your wines from bonded storage, you'll be required to pay duty and VAT on them. The below calculator gives you an indication of how much that will be. 

Enter the value of the under bond wine and the number of bottles and the calculator will show the duty, VAT and a total cost that includes these taxes.

 

 

 

 

Please note these are estimated calculations. The final amount will be calculated when the wines are withdrawn from bond.

The Benefits of Buying Wine Under Bond 

Buying wine under bond offers several advantages, especially for collectors and investors: 

Tax Efficiency: One of the most significant benefits is the ability to defer duty and VAT. If you're purchasing wine for investment purposes, this means you can buy and sell wine without paying taxes, maximizing your potential profit. 

Optimal Storage Conditions: Wines stored under bond are kept in professional, climate-controlled warehouses that ensure optimal aging conditions. This storage method can enhance the wine's value over time, as it preserves its quality and provenance. 

Simplified Selling Process: Selling wine that is under bond is often easier and more attractive to potential buyers. Since the wine has been stored under ideal conditions and the buyer can defer tax payments, wines in bond can command higher prices on the secondary market. 

Provenance and Authenticity: Wines stored in bond are less likely to be tampered with or counterfeited, providing greater assurance of their authenticity and provenance. This is particularly important for rare and valuable wines where provenance is a critical factor in determining value. 

Investment Potential: For those looking to invest in wine, purchasing under bond allows for a more strategic approach. Since the wines remain untaxed, investors can hold their wines for extended periods, watching market conditions and selling at the optimal time without incurring additional tax burdens until the wine is released from bond.