Scrapping duty escalator will benefit wine and spirits trade by £175m

By Gemma McKenna

Published: 19 March, 2014

Scrapping the duty escalator and freezing spirits duty will boost the wine and spirits trade to the tune of £175 million, says the Wine & Spirit Trade Association (WSTA).

Although wine duty is set to increase by RPI inflation (2.5%) on March 24 this is lower than the 4.5% that would have been added if the duty escalator had not been withdrawn. Spirits duty is being frozen completely in 2014 along with cider, whilst there is a 1p cut in beer duty.

The announcement by the Chancellor follows a high profile Call Time on Duty campaign, spearheaded by the WSTA, along with the Scotch Whisky Association and The TaxPayers' Alliance, which resulted in almost 90% of MPs being emailed by their constituents through the www.calltimeonduty.co.uk website calling for their support.

The centrepiece of the campaign was independent research carried out by Ernst and Young that found scrapping the escalator will boost the public finances by £230m and create 6,000 new jobs.

Miles Beale, chief executive of the WSTA, said: "While we would have liked to have seen a complete freeze on wine duty, this is a positive step and as such the WSTA applauds the Chancellor's decision to scrap the escalator."

He added: "'The wine and spirit industry is set to save £175 million in additional duty payments following the Chancellor's decision to scrap the Alcohol Duty Escalator."

Duty changes:

* Duty on a 750ml bottle of wine is now £2.05p, up by 5p

* Duty on a 750ml bottle of sparkling wine is £2.63, up 7p

* Duty on a 70cl bottle of vodka at 37.5% remains at £7.41p

* Duty on a litre bottle of vodka at 37.5% remains at £10.58p

* Duty on a 70cl bottle of gin at 40% remains at £7.90p

* Duty on a litre bottle of gin at 40% remains at £11.29p

The revised rates are due to come into effect at midnight, Sunday March 23. The rate of inflation, which stands at 2.47%, is calculated by using the RPI estimate for September 2014 provided by the Office of Budget Responsibility.

Drinks distributor, Bibendum, has created the following graphic to highlight the new duty and cost splits on different priced bottles of wine.

Wine duty