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Double tax whammy for wines in the UK market

On October 30, the new Labour government delivered a double blow to the British drinks industry by announcing it would be raising alcohol duty in line with retail price inflation, and going ahead with the previous government’s new tax regime by ending the wine easement on February 1, 2025.

The moves are described as “counterproductive” and even “a real kick in the teeth” by the Wine & Spirit Trade Association, which represents over 300 companies producing, importing, transporting and selling wine and spirits in the United Kingdom, the world’s second largest wine importer. Counterproductive because HMRC data show that since the largest tax rise in nearly 50 years in 2023, alcohol duty receipts were down almost £500 million in the first six months of the financial year. Proof, were it needed, that increasing duty does not bring in much-needed revenue. The decision to end the wine easement, as planned by the Conservative government, on February 1 next year, will lead to the introduction of a complicated, and costly, system of duty based on alcoholic strength.

 

The current single band embracing wines with an ABV of between 11.5% and 14.5% will be replaced by up to 30 different payable amounts. For a bottle of wine with an ABV of 14.5%, duty will rise from £2.67 a bottle to £3.09, with increases compared with the current system kicking in once a wine reaches 12.7% ABV. A number of prominent British wine merchants – including Majestic, Laithwaites and The Wine Society – have launched a campaign to raise awareness of the forthcoming price hikes among the public, and continue to lobby the government “for urgent change ahead of the next fiscal event”.