UK tax freeze brings short-term relief for wine sector

The UK government has announced a freeze on alcohol duty in the Spring Budget which was declared on Wednesday 6 March.

In August last year record tax hikes were introduced which caused significant disruption to the British drinks industry, meaning the latest freeze has brought relief.

According to the Wine & Spirit Trade Association, the benefits for wine will be short lived after the exchequer secretary, Gareth Davies MP, confirmed plans to change the way wine is taxed, meaning the benefits of the freeze will be lost from 1 February next year.

“The wine and spirit sector will be relieved that the chancellor has spared them a further duty hike. This will help to keep price rises down for consumers for a period,” said Miles Beale, chief executive of the WSTA.

“Six months ago, alcohol duty was subjected to the largest increase in almost 50 years. Those tax increases fuelled inflation and had a negative impact on sales, which in turn has seen the treasury lose around £600m in alcohol revenue.

“However, the benefits of a freeze will be short lived for wine businesses who are fuming after confirmation that costly and fiendishly complex new taxation rules will come into force from 1 February 2025. The changes to taxing wine have been described as “un-administrable” and “sheer lunacy” by our members.

“Scrapping the easement for wine duty will see price increases for 75% of red wines sold in UK. The chancellor and his treasury colleagues should have listened to businesses and kept in place the sensible, simplified procedure for taxing wine. It’s going to be a very costly mistake.”

Steve Finlan, CEO, of the Wine Society, added: “We are extremely disappointed that, yet again, government has failed to listen to business. Following the disastrous increase in wine duty last year, which has resulted in hundreds of millions of lost revenue to the Treasury and placed further strain on the wine trade; to double down with the intention of introducing a ludicrous and complex process for calculating duty rates shows just how tone deaf they have become.

“It is hard to see how this new system could be made any more complicated. It is tough for a small company with a few hundred wines to sell. For The Wine Society with tens of thousands of wines stored in-bond, it is close to unworkable, yet another mountain of red tape and more costs for the consumer to bear.”

Since 2010 the Tory government has put up fortified wine duty by 90%, still wine duty by 58%, spirits duty by 33% and beer duty by 21%.