Contrary to what the government said about the proposals, this would increase the duty paid by wine (but not beer or spirits) by over 5%, despite ending the illogical duty premium on sparkling wine. Our view on these proposals has remained that the Government should not increase duty during a period of unprecedented economic difficulties for our customers or create an unnecessary administrative burden that will likely diminish the diversity of high-quality wine available in the UK.
On Friday 23rd September the Government announced that:
• There will be no changes to the duty system until 1 August 2023: All changes to the duty system have been postponed from 1 February 2023 until 1 August 2023, with duty frozen at current rates until 1 August 2023.
• From 1 August 2023 wine will pay duty in line with its labelled ABV: Despite a large volume of critical feedback, the Government believes that this approach remains appropriate and will transition to an ABV-based duty rate for wine where each 0.5% increase in labelled ABV incurs additional duty of 9.9p per 75cl (see table linked below).
• A wine of 11.5% ABV will pay the same duty under the new system as the current duty rate, i.e., duty will increase on most still wine. In line with the Government’s initial proposals, wines under 11.5% will pay less duty and wines over 11.5% will pay more. This will add c.18p of duty to the average bottle of still wine.
• The duty premium on sparkling wine will end as proposed, i.e. duty will decrease on most sparkling wine. This will result in a bottle of sparkling wine of 11.5% ABV paying £2.23 in duty, 63p less than current rates, when the new system is implemented in full.
• There will be a transition period until 1 February 2025 that means all wines between 11.5% and 14.5% ABV will pay the duty rate of a 12.5% ABV wine. Wines below 11.5% will pay their new, reduced duty rate and wines of 15% ABV or more will pay their new, higher duty rate from 1 August 2023. This means wines of 11.5% - 12.5% ABV will pay higher duty from 1 August 2023 than from 1 February 2025 under the currently stated duty rates.
• Duty rebates to support the on-trade, via draught relief, and small producers remain of little relevance to wine as they do not apply to products over 8.5% ABV.
The implications for wines of different ABV are set out in the table here.
We disagree with much of the Government’s consultation response. These duty reforms do not create a simpler, more consistent system without significantly adjusting the amount of revenue raised from alcohol duty as they claim. This duty system will impose an additional administrative burden, favours beer and cider over wine and spirits, mistakenly believes quality-led winemakers can and should reduce the ABV of their wines, and covertly raises wine duty by 5%. We will continue to communicate these concerns through the channels available to us.
Our primary focus will remain upon supporting our customers to adapt to these changes when they occur. Assuming this change to duty takes place on 1 August 2023, we will communicate the effects on duty-paid pricing in spring 2023.