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Budget: duty frozen on wines, spirits and beers

Published:  22 November, 2017

Duty on wines, spirits and beers is to be frozen, Chancellor Philip Hammond announced in today’s budget, allaying trade fears of another rise in line with inflation.

High strength alcoholic drinks such as cheap cider will, however, be hit by a duty increase, in an attempt to curb problem drinking.

Invoking the Christmas spirit, Hammond’s duty freeze provoked a cheer in the House of Commons, and one that doubtless will be echoed across the UK drinks trade.

Commenting on the duty freeze, Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA) was in upbeat mood.

“We are pleased that the Chancellor has found his festive spirit and listened to the call from the WSTA and its members and has frozen wine and spirit duty. He has shown the Government is in touch with what consumers want and is supporting an industry which is proving to be a real asset to British business,” he said. 

Beale added that “rebalancing the UK’s excessive duty rates is a win-win for both the Treasury [and] the wine and spirit trade”, with a freeze in the 2015 budget - the first of only two to date over the last 15 years - boosting wine duty by £136 million and duty on spirits by £124 million during that period. 

Putting the brakes on an inflation-linked duty escalator should deliver a helpful fillip to the UK wine and spirits industry. 

WSTA calculations suggest that the change in government policy will save the UK wine and spirit trade around £247 million. The industry already contributes over £7.5bn to the Treasury in duty, while supporting 554,000 British jobs and generates £50 billion for the UK economy. 

The freeze means that duty on an average priced bottle of still wine will remain at £2.16, sparkling wine at £2.77, and duty on an average priced bottle of 40% abv spirits stays at £8.05. 

Elsewhere, other industry relevant headline figures delivered in Hammond’s budget included rises to the National Living Wage from April 2018, with the Chancellor confirming that this will rise 4.4%, from £7.50 an hour to £7.83.

On the costs to buisnesses of rising business rates, Hammond announced that he will be bringing forward plans to uplift these by the CPI inflation index, not RPI, with a switch now planned in April 2018 (rather than 2020), with the Chancellor claiming that this will save business £2.3bn.