What is in bond wine storage? Duty, VAT, and benefits
Updated
What is in bond wine storage? It allows you to hold your wine in an HMRC-approved warehouse, deferring the payment of excise duty. HMRC's Excise Notice 197 explains that goods "are deemed to be warehoused when they enter the area approved by HMRC," and remain in duty suspension until removed for home use. When you remove wine for a UK address, the excise duty is payable at that time. While in the warehouse, the VAT status of the goods is a factor, and this information should be on commercial documents. Owners of duty-suspended excise goods held in a warehouse may sell their goods in duty suspension at any time, according to HMRC's Excise Notice 197, meaning you may never pay duty or VAT if you sell the wine before it leaves the bonded facility. This system provides a regulated environment for fine wine, ensuring its tax-deferred status and often offering optimal storage conditions for long-term ageing.
What does "in bond" actually mean?
"In bond refers to both a physical location and a specific tax status for your wine. HMRC's Excise Notice 197 explains that it applies to excise goods held in duty suspension. The physical location is an excise warehouse, which is a premises approved by HMRC. Goods are deemed to be warehoused when they enter the area approved by HMRC. This approval is part of a system that also covers the authorisation of warehousekeepers" and "approval of premises as excise warehouses," as detailed in HMRC's Excise Notice 196, which should be read alongside Notice 197.
The tax status means that excise duty is suspended. This suspension continues as long as the wine remains within the approved warehouse. If you remove the wine from the warehouse for "home use," the excise duty becomes payable at that time, according to HMRC's Excise Notice 197. However, if you sell the wine while it remains in the warehouse, you can sell it in duty suspension, meaning the new owner takes on the responsibility for the deferred duty. The VAT status of the goods is also a consideration for warehoused items, and commercial documents should contain this information.
What are the benefits of in-bond storage?
The primary benefits of in-bond storage are the deferral of excise duty and VAT, alongside professional storage conditions that protect your wine's quality and value.
Tax Deferral
Keeping your wine in bond means you do not pay excise duty or VAT until the wine leaves the approved warehouse for a UK address. HMRC confirms in Excise Notice 197 that "Owners of duty-suspended excise goods held in a warehouse may sell their goods in duty suspension at any time." This allows you to sell your wine without ever incurring these taxes, which can be a significant advantage, particularly for investment wines. The standard VAT rate is 20% on most goods and services. HMRC lists alcohol duty rates by alcohol by volume (ABV), updated on 1 February 2026. Wine between 8.5% and 22% ABV incurs £30.62 for each litre of pure alcohol. Deferring these costs can enhance the liquidity and profitability of your fine wine portfolio. You can use a landed-cost calculator to understand the full costs.
Optimal Storage Conditions
Professional bonded warehouses offer precise environmental controls that are crucial for the long-term ageing of fine wine. The Australian Wine Research Institute (AWRI) highlights that "the conditions under which wine is stored and transported can have a major impact on its sensory properties."
The AWRI lists these key environmental factors for wine storage:
- Temperature: "Excessive storage temperatures will have a marked effect on the shelf life of bottled wine and can see rapid ageing and significant deterioration of the product." Marais (1986) observed "faulty flavours and decreasing overall quality after 12 months’ storage of wine at 30°C." Temperatures "in excess of 40°C will induce visual and sensory changes to a wine in only a matter of days (Ough 1986)." Generally, "any storage place where the temperature exceeds 25°C for long periods and 40°C for short periods can affect wine quality (Ough 1992)." Amon and Simpson (1986) recommend storing bottled wine in a "cool (15-20°C), dry location." Thermal cycling, where temperature "varies significantly between day and night," should be avoided (Hirlam 2019a,b).
- Humidity: "Humidity is important too, as wines under natural closures can dry out and leakage can occur if the air is too dry."
- Light Exposure: "Exposure to light during wine storage will also have an impact on wine quality." Dozon and Noble (1989) found that still and sparkling white wines in green glass developed lightstruck flavour after 31.1 hours and 18 hours, respectively, under fluorescent lamps. The same wines in clear glass developed this flavour after only 3.3 hours and 3.4 hours. The AWRI notes that direct sunlight provides 4286 times the amount of UV-A radiation as fluorescent lamps, making sunlight exposure "more deleterious to wine quality." It is recommended that wine be stored under insulated and/or temperature-controlled storage conditions, which minimise fluctuations in both temperature and humidity.
These controlled environments help preserve the wine's condition, including ullage levels and cork integrity, which are vital for its marketability and long-term value. You can learn more about wine ullage levels.
What are the costs associated with in-bond wine?
While in-bond storage defers duty and VAT, other costs apply. These include an annual storage fee per case, charged by the bonded warehouse, potential auction fees, and fees for movement guarantees.
| Cost Type | Description |
|---|---|
| Excise Duty | Payable on removal for home use to a UK address. Rate depends on the wine's ABV, calculated per litre of pure alcohol. For wine between 8.5% and 22% ABV, the rate is £30.62 per litre of pure alcohol, as of 1 February 2026. |
| VAT | Standard rate of 20% on most goods and services. This applies to the total value of the wine, including excise duty, when removed for home use. |
| Auction Buyer's Premium | If you buy wine at auction, a premium applies on top of the hammer price. Christie's charges a "buyer’s premium for wine" of "25% of the final bid price of each lot" at its New York auctions. |
| Sales Tax | Applicable sales tax may be collected. Christie's "shall collect New York sales tax at a rate of 8.875% for any lot collected from Christie’s in New York." |
| Movement Guarantee | A financial institution may charge a fee for underwriting a movement guarantee, which protects revenue at risk during duty-suspended movements. HMRC does not charge a fee for processing these guarantees. |
Understanding these costs is crucial for fine wine investment and managing your portfolio.
How do you sell wine that is in bond?
Selling wine that is in bond is a straightforward process, as it allows you to transfer ownership without the wine ever leaving the duty-suspended warehouse. HMRC states in Excise Notice 197 that "Owners of duty-suspended excise goods held in a warehouse may sell their goods in duty suspension at any time."
To facilitate a sale, you, as the current owner, "should inform the warehousekeeper that the goods are to be sold and give details of who the new owner will be." Similarly, the new owner should "inform the warehousekeeper that the goods are to be purchased and provide your business details to the warehousekeeper."
This method of sale means that neither you nor the buyer pays excise duty or VAT at the point of transaction, as the wine remains in bond. The responsibility for these taxes transfers to the new owner, who will pay them only if they decide to remove the wine for home use in the UK. Commercial documents accompanying the wine should include information that "could affect the VAT status of the goods" during such sales, as EMCS does not track this detail. This flexibility makes selling fine wine in bond a common practice in the secondary market.
What are the risks of in-bond storage?
While in-bond storage offers significant benefits, you should be aware of certain risks, primarily related to financial liability during the movement of duty-suspended goods.
HMRC's Excise Notice 197 details the requirements for a "movement guarantee," a "form of financial security that’s underwritten by a bank or some other approved financial institution." This guarantee "intended to protect the revenue at risk when excise goods are moving in excise duty suspension." If you provide this guarantee, you are "accepting liability for any excise duty that may become due in the event of an irregularity occurring during the movement." It is important to note that "Your liability as the guarantee provider is not restricted to your guarantee amount."
Should an "irregularity occurs or is deemed to occur during a movement of excise duty suspended goods," the "duty suspended movement ends and the excise duty is payable at that time." The person who provided the movement guarantee is liable to pay the duty. This liability extends to instances of theft: Excise goods are not considered irretrievably lost or destroyed if they are stolen during an excise duty suspended movement. In such cases, the excise duty is still due on the goods.If you fail to pay the excise duty assessment, HMRC"can: make a claim against your movement guarantee" and "ask the guarantor for payment of the full guarantee amount."
These financial liabilities underscore the importance of choosing reputable warehousekeepers and transporters when moving your in-bond wine. When considering how to buy wine at auction or from a merchant, understanding these potential liabilities is key.
Calculate the total cost of your next wine purchase, including duty, VAT, and shipping, with our landed-cost calculator.