A freeze on duty – and why UK wine drinkers are paying enough

Within a week of the Budget we’re usually wincing at the new, higher rates of duty being charged on our wine as it leaves our Bonded warehouse near London to be delivered to customers. With just one exception in the last 15 years (in 2015, just before, ahem, the 2015 General Election), duty on wine has always gone up. So it’s a welcome relief that Philip Hammond decided to freeze the duty on wine in his Autumn Budget. Here are some insights and graphics as to why wine drinkers in the UK have been hit hard enough already.

  • We shouldn’t forget that UK wine duty went up in the March Budget, from £2.08 to £2.16 a bottle + VAT (now £2.60 inc).
  • This century, wine duty is up 67% in the last 9 years compared to 15% in the 8 years before that. And cost prices have risen due to sterling’s slide – 2 years ago £1 was worth €1.42, now €1.12 😔.
  • Wine drinkers contributed 45% more duty revenue in 2016 than in 2008, even though the volume consumed has remained fairly consistent. By comparison, duty revenues by HMRC for alcohol excluding wine – i.e. spirits and beer mostly – rose 16% from 2008 to 2016. Wine duty revenues (£4066m in 2016) are higher than spirits (£3251m) and beer (£3302m).
  • ‪£3 of a £5 bottle is tax – £2.16 duty and 84p VAT. The net price of this bottle is the same as the jar of jam or the 4-pack of baked beans. (If you saw this in 17 unpalatable truths about UK wine duty – sorry, but I couldn’t resist it.)
  • ‪Half of a £6.50 bottle of (still) wine is tax. A useful guide is that above that price, less than half is spent on tax.
  • Here are the duty rates across the EU, for still wine, showing the huge disparity.
  • Yes, large wine producing nations like France, Spain, Italy and Germany charge a lot less duty, if any – yet wine duty in the UK is over 4 x higher than in, say, Belgium.
  • Duty rates on Sparkling wine across the EU:
  • ‪Duty is more for Sparkling wine, at £2.77 + VAT (£3.33 or £40/12): over £4 of a £7.50 bottle of fizz is tax.
  • ‪With such high duty, by the way, not much sparkling wine is sold in Ireland – less than 5% of wine duty receipts there in 2016 were for sparkling wine (€17m/€371m), compared to the UK at 12% (£488m/£4066m).
  • Of all wine duty revenue levied by countries in the EU, the UK takes over 63%.
  • That 63% UK share is down on previous years (66+%) due to the lower value of sterling. (The UK population is around 13% of the EU total.)
  • ‪The Chancellor said he wanted to support pubs by not increasing duty: he’s right – duty is payable as soon as the wine leaves customs or a Bonded warehouse, so it’s treated – by pubs, wine shops etc – as a cost on which a margin has to be made. It’s also tough on cashflo‬w.
  • So we raise a glass to the Chancellor for freezing duty on wine, as well as on spirits, beer and most ciders. After all, it makes good economic sense for all, and nobody wants a bleak mid-winter.
  • And, finally, well done to my friend Miles Beale and his team at the Wine and Spirit Trade Association for their campaign to keep duty increases to a minimum in support of businesses and consumers.

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