PROTECT THE VALUE OF YOUR SAVINGS AND AVOID RISING INFLATION PRESSURE

Planning for the next financial year? Former Bank Manager and successful whisky investor, Roger Parfitt, tells us why cask ownership is a financially stable option in the current climate

  • Current duty freeze is favourable for those looking to invest in Scotch Whisky
  • No Capital Gains Tax on Scotch Whisky offers higher profit potential for investors
  • Expert stockist, Whisky Investment Partners shares how customers are looking for better returns to reduce the risk to savings and build a future pension portfolio.

With the cost of living rapidly escalating, UK inflation set to rise to a staggering 7%, and with last year’s sudden increase in interest rates, knowing how and where to invest money is a challenge faced by many consumers. But with an unprecedented second-year freeze on alcohol tax announced last year and global Scotch Whisky consumption forecasted to continue in growth by 8.2% by 2023[1], cask whisky is fast becoming an extremely attractive alternative investment option.

Roger Parfitt, former bank manager and successful whisky investor, understands the importance of good personal money management and has made a career over the past 40 years helping businesses and individuals make and manage money.

Following an investment of £4,700 twenty-seven years ago in cask whisky (£3,200 and £1,500 for a Macallan and Tobermory cask, respectively), Roger signed a sale agreement with Whisky Investment Partners for a whopping £225,000 – a massive 4,600% return on his initial investment last summer.

Believing whisky investment to be a relatively low-risk option, Roger, now a Brand Ambassador for Whisky Investment Partners, has purchased more casks.

Following his successful journey, he tells us: “It is important to turn to tangible assets to invest in with the knowledge that these methods offer less risk of being impacted by fluctuations in the market.” Roger explains, “Assets like Scotch Whisky have shown that they can ride out such storms and continue to offer value for money.”

Roger continued: “As we move into spring and summer, we have every reason to believe the benefits of investing in the traditional haven of profitable, fully-owned, tangible assets are a lucrative option in the current climate, especially when compared to traditional investment forms such as stocks and shares.”

Like most industries, whisky production and distribution were impacted by the 2020 pandemic, but the effects were short-term, and the value of whisky has been largely unaffected, making cask whisky investment all the more attractive in 2022.

Crucially, as whisky casks are defined as a wasting asset by the HMRC due to the natural evaporation that occurs during the maturation process, they are not subject to Capital Gains Tax, which gives investors more opportunities to maximise their profits when they choose to sell.

“We’ve seen an increase in demand across the board and we’re hearing from those who are acutely aware that if they do nothing, they’ll earn up to 7% less on their other investments when the new inflation rate hits. Cask whisky has offered stable returns historically, with the added benefits of it being a tangible asset. Looking forward, we expect this to increase further over the next few years in line with global consumption growth,” Roger adds.

Despite spirits, including Scotch Whisky, continuing to be taxed more per unit of alcohol than beer, cider and wine due to their higher ABV content, the current duty freeze provides welcome relief to all distillers, specifically in Scotland where 92% of all UK spirits are produced or bottled[2].

Global demand for whisky is high. The duty rate on spirits continues to be £28.74 per litre of pure alcohol, meaning the tax burden on the average priced bottle of Scotch Whisky is 70%[3]. Nevertheless, the duty freeze confirms that the UK government endeavours to support the whisky industry and protect the investment market for Scotch Whisky, with the annual CPI forecast for inflation predicted to peak at 4.6% in April 2022[4].

Roger tells us: “The freeze offers a golden opportunity within the whisky investment market. By avoiding steep inflation rates, it is now more attractive than ever for investors to begin their whisky investment journey.”

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