‘There are no winners….. higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more’
Alcohol prices are set to soar from Saturday as a rise in tax and duties comes into effect.
The alcohol tax will increase by 3.6% in line with the Retail Price Index, while a new system taxing wines and spirits based on their strength will also be introduced. This means gin lovers will have to pay out an extra 32p per bottle, while wine with a 14.5% ABV (alcohol by volume) will see a hike of 54p.
These changes to excise duty and the introduction of strength-based wine taxation were implemented on August 1, 2023, but the Tory government granted a temporary reprieve for wines with a strength between 11.5% and 14.5%, taxed at a flat rate of 12.5%.
According to calculations by the Wine and Spirit Trade Association (WSTA), a 14.5% ABV bottle of red wine would have seen a price jump of 98p in 18 months, factoring in the new duty hikes introduced in August 2023. The WSTA also cautioned about additional costs come April due to waste packaging recycling fees, adding another 12p to a bottle of wine and 18p to a bottle of spirits.
However, there’s some relief for pub-goers as duty on draught products – or pints pulled in pubs – will be reduced by 1.7%, translating to a penny off a pint in the pub. These latest duty increases on wine and spirits follow the largest hikes in nearly half a century in August 2023, which added 20% to excise duty on over 85% of all wines on the UK market and more than 10% to duty paid on full-strength spirits.
Alcohol duty is paid by manufacturers when they produce their products. Spirits and wines tend to be taxed more than ciders and beers because they contain a higher percentage of alcohol. Typically, manufacturers pass this tax onto the customer, with price increases at their discretion.
HMRC’s recent figures reveal that alcohol tax revenue dipped by £209m in the financial year ending December 2024 when compared to the year before. Chief executive of the Wine and Spirit Trade Association (WSTA), Miles Beale, said: “The Government continues to claim that the tax hikes are part of their big plan to plug the black hole in the public finances, but a series of record-breaking tax levies are doing the exact opposite.
“There are no winners under the UK’s punishing alcohol tax regime – higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more.
“Unfortunately, the pain of price hikes for consumers won’t stop there as new taxes on waste packaging are coming round the corner. This seemingly never-ending assault on wines and spirit businesses mean consumers need to brace themselves to pay substantially more for their favourite products.”
Hal Wilson, co-founder of Cambridge Wine Merchants, described the impact on his business as: “In my business this feels like death by a thousand cuts, or even two thousand cuts.We sell over 2,000 different wines each year and from February will need to know the precise ABV of each and every one before being able to calculate their full cost.
“For each 0.1% ABV difference there is a different amount of tax to be paid. Our range of wines has 48 different ABVs between 8.5% and 22%. This herculean bureaucratic exercise would not be necessary to carry out if the rates of tax weren’t so eye-wateringly high.”
Meanwhile, Exchequer Secretary to the Treasury James Murray, said:”Our pubs and brewers are an essential part the fabric of the UK and our brilliant high streets.
“Through draught relief, small producer relief, and expanding market access for smaller brewers, we will help boost sector growth and deliver our Plan for Change to put more money in working people’s pockets.”
Richard Naisby, heading the Society of Independent Brewers and Associates, said: “The Government’s increased investment in draught relief means that draught beer sold in our community pubs has a lower rate of alcohol duty than beer sold in supermarkets and should encourage more people to support their local.
“At the same time by going further on small producer relief, the Government can help small breweries to compete and grow their businesses.”
