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Tough year ahead for drinks trade as VAT rises

Published:  04 January, 2011


The 2.5% VAT rise will make the year ahead "pretty tough" for drinks retailers, according to the WSTA.

The 2.5% VAT rise will make the year ahead "pretty tough" for drinks retailers, according to the WSTA.

A spokesman for the Wine & Spirit Trade Association said: "The prospect of tax increases in various areas along with the VAT hit will have a significant impact on houselhold budgets. Wine margins have been seriously eroded in recent years."

Meanwhile the British Beer & Pub Association said the VAT hike will put more than six pence on the price of a pint of lager.

Brigid Simmonds, BBPA chief executive, called it a "tax blow for the industry" and said the duty and VAT 'double whammy' was placing shackles on the pub and hospitality sector at a time when it could be creating jobs, and leading the UK economy out of recession.

Research by New Oxford Economics predicted the VAT rise would lead to the loss of around 8,800 jobs related to the sale of beer. Further planned duty increases will cost the Treasury £40 million in reduced tax revenues, and lead to another 10,000 job losses in the sector.


Some retailers plan to phase in the rise, which would equate to a 2.1% increase given that the tax applies to the original rather than existing price. Angela Mount, who heads up online vendor yourfavouritewines.com, said the group would be implementing the increase "toward the end of the week". "We're going to apply the percentage rounded up or down to the nearest penny," she added.

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