UK wine duty went up to £2.50 a bottle (£2.08 ex-Vat) in the Budget on 16 March, which was disappointing following last year’s ’freeze’. It now seems that the freeze thawed fairly soon after the General Election and that any future drop in duty is unlikely.
I’ve updated the charts I’ve used before showing how the UK compares with the rest of Europe – not well – and the evolution of wine duty since 2000. It is demonstrably unfair to the British wine consumer, and spare a thought for the poor Irish. The Irish have the highest duty on wine, with Britain in second place.
It’s reasonable to believe that duty is almost non-existent in wine producing countries to protect their local industries, but what about wine-loving Belgium on just 40p a bottle? And as you can see below, the last eight years have been much tougher on British wine drinkers compared to the previous eight. (We bought the vineyard and started selling our wine in the UK in 2000.) The exchange rate is included to show the relative buying power of sterling against the euro. Wine was singled out for a small increase in the Budget while duty was unchanged on spirits, cider and beer. Why Britain’s wine drinkers, producers, importers, merchants and retailers (the admin and tight margins – argh!) have been hit once again is unclear. Beer drinkers shouldn’t be fooled either over their continuing duty ’freeze’ – it’s still the second highest rate in Europe I’m told, just like wine.
One thing is clear, however. UK duty on wine is now £2.50 a bottle or £30 on a case of 12, if you include the VAT on the duty. So, if you want to know the tax on any bottle of still wine, take the £2.50 duty and divide what’s left by 6 for the VAT on the wine.
£8.50? £2.50 plus 1/6 of the remaining £6 = £3.50 tax in all, leaving £5 on the wine, shipping, bottling and margins.
What about £5.50, the average price paid for a bottle in the UK? £2.50 duty and then £3 / 6 (50p) = £3 total tax, leaving £2.50 on the wine, shipping, bottling and margins.
Duty on sparkling wine and Champagne went up to £3.20 a bottle (£2.67 plus VAT) or £38.40 on a case of 12. The new duty rates apply from 21 March 2016.