Consumers will see the price of alcohol rise from Saturday when a hike in tax and duties comes into effect. The alcohol tax itself will rise in line with the Retail Price Index at 3.6%, but a new system to tax wines and spirits based on strength will be introduced at the same time.
This means the duty on a bottle of gin will rise by 32p, while wine at 14.5% ABV (alcohol by volume) will increase by 54p. The changes to excise duty and taxing wine according to strength came into effect on August 1, 2023 but the Conservative government introduced a temporary reprieve for wines with a strength between 11.5% and 14.5%, taxed at a flat rate of 12.5%.
The Wine and Spirit Trade Association (WSTA) has calculated that a 14.5% ABV bottle of red wine would have risen by 98p in 18 months, taking into account new duty hikes introduced in August 2023. It also warned of further costs in April due to waste packaging recycling fees coming into effect, adding an additional cost of 12p for a bottle of wine and 18p for a bottle of spirits.
However, in some relief to drinkers, duty on draught products – or pints pulled in pubs – will be cut by 1.7%, meaning a penny off a pint in the pub. The latest hikes to duty on wine and spirits follow increases in August 2023 that were the largest in almost 50 years, adding 20% to excise duty on more than 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 make their products. In general, spirits and wines are taxed more heavily than ciders and beer due to their stronger alcohol content.
The duty is generally passed onto consumers by manufacturers, but product price increases are at their discretion. Latest figures from HMRC show that alcohol tax receipts have fallen by £209 million in the financial year to December 2024 compared to the previous year.
WSTA chief executive 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.”
He added: “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, said: “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.”
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, chairman of 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.”