Spotlight on the new UK alcohol duty system
This show was published 05 November 2021
In this spotlight Chris reviews the UK changes in alcohol duty and how they will affect wines when they come into force in 2023.
A brief history in UK alcohol taxes - Beer duties were first introduced in 1643. By the mid 18th century the gin craze meant 6 times more gin than beer was being produced and the gin act in 1736 imposed a high duty rate. In 1751, a tax reform meant the taxation fell on the place where gin was being consumed, with premised needing to be licensed to sell alcohol, rather than taxing just the gin itself.
Over time, a large number of categories for taxing alcohol have been created by various governments. These rates have been rising steadily over the last 20 years, when ex-chancellor Gordon Brown introduced a tax escalator back in 1997.
Currently, most wines fall into three key rates and the duty for these for a typical 750ml bottle of wine are:
Still wine 5.5% - 22% £2.23
Fortified wine 15% - 22% £2.98
Sparkling wine 8.5% - 15% £2.86
From 2023, all alcoholic drinks will be taxed based on their alcohol strength, whether it be wine, beer, cider or spirits. This will be divided into 5 bands as follows:
Duty per % of alcohol:
1% - 1.2%
1.3% - 3.4%
3.5% - 8.4%
8.5% - 22%
Sparkling wine in the UK will be the big winner as it will attract the same duty as still wine (rather than the higher duty currently), but any lower alcohol wines will also be better off. The losers will be fortified wines such as ports and sherry. Red wines too will be hit, as they are often higher in alcohol than white wines.
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