Recent changes to alcohol duty in the UK aim to align tax with public health objectives.
- Tax rates will now vary based on alcohol strength, affecting wine, spirits, and beer differently.
- High-strength drinks above 8.5% ABV will maintain their current tax rate.
- Notable increases include higher taxes on port, sherry, and vodka, while sparkling wine sees a reduction.
- The new duty system is designed to support lower alcohol drinks and small producers, although there are concerns of inflation.
The UK government has introduced changes to alcohol duty that aim to align taxation with public health objectives. Different tax rates will now apply to drinks based on their alcohol by volume (ABV), with lower rates for drinks with ABV of 3.5% or below, and no change for those above 8.5% ABV. The Wine and Spirits Trade Association (WSTA) highlighted potential inflationary impacts, particularly on premium products.
Drinks with higher ABV, such as port and sherry, will experience significant tax increases, with port taxed an additional £1.30 per 75cl bottle and sherry by 97p. Similarly, vodka will see a tax rise of 76p per 70cl bottle, while the tax on an average bottle of red wine will increase by 44p. These changes reflect an intention to moderate consumption of higher-strength beverages.
Conversely, sparkling wine will benefit from a tax reduction, now costing 19p less for a 12% ABV bottle than previously. This adjustment is part of a broader strategy to support the hospitality industry, with beer taxes rising by 4p in stores but remaining unchanged in pubs, a decision Prime Minister Rishi Sunak suggests will support pubs and potentially ‘reduce the price of a pint.’
Chancellor Jeremy Hunt remarked that the duty changes aim to modernise the taxation system, encouraging growth within the sector and accommodating the rising popularity of low-alcohol beverages. He emphasised the financial support this move provides to small producers, aligning with wider economic goals.
Despite the intentions behind these reforms, the WSTA voiced concerns regarding their impact on consumers, cautioning that the policy may add to inflation-related pressures. They contended that the duty changes may disproportionately affect premium spirits and wines compared to other products, hinting at a potential bias within the new tax framework.
These changes reflect a significant shift in how alcohol is taxed in the UK, aiming to balance public health considerations with economic growth.
