How Whisky Investment Works

Learn more about the process of how whisky investment works before getting started

What are the costs of investing in whisky?

So, how does whisky investment work? Cask whisky investment is low cost, hassle free and very secure. Bound by a rigid set of HMRC rules, casks of single malt whisky have to remain within the boundaries of Scotland and in an HMRC bonded facility. There are literally hundreds of bonded warehouses in Scotland, providing vital income to many rural areas of Scotland. Many of our casks will be stored at the bonded facilities owned by the distillery that produced the cask, but not always. Often distilleries will spread their casks across a wide range of distilleries and warehouses ensuring that they mitigate any risk of fire damage, for example.

Warehousing Costs

The cost of warehousing a cask can vary dependent on the prestige and location of the facility. However, the typical cost will be around £40 per cask, per year. This is the only cost attached to the cask and is payable from Year 10 onwards of your investment duration- we cover all costs for the first 10 years .

Insurance Costs

Comprehensive insurance cover for all casks is held by Highland Cask Group Ltd indefinitely. Our policy cover is for up to £1 million on any one incident and all casks, including those belonging to our clients, are covered against fire, theft, natural disaster and accidental damage. The cost of this insurance is covered in its entirety by Highland Cask Group indefinitely.

Performance Related Fee

Most investment houses that manage assets belonging to clients will charge a fixed yearly fee, regardless of the outcome of the investment. At Highland Cask Group we take a different approach – we manage your asset on an open-ended basis and charge no yearly fee.

Instead, Highland Cask Group Ltd are contractually obliged to take 10% of any profits made on the cask at the end of the investment period, whenever that may be.

The greater the profit we make for the client, the bigger our commission at the back end and so we are incentivised to generate as much profit as possible for our clients.

Illustrative Example of Costs

Indicative figures to show how the above costs are calculated:

CASK PURCHASED
Mr Smith invests £10,000 in a single cask of Scotch single malt in 2020

CASK SOLD
He sells the cask through HCG Ltd for £15,000 in 2023

COMMISSION
HCG Ltd’s commission would be 10% of the £5,000 profit generated, equalling £500

RETURN ON INVESTMENT
Mr Smith would therefore receive £15,000, minus £500 (HCG’s Ltd commission), equalling £14,500

TAXATION
The £4,500 profit is exempt from CGT owing to its ‘wasting asset’ status*

*Our advice is always to consult with your own independent tax advisor.