WSTA calls for duty freeze and extended VAT reduction in Budget

By Michelle Perrett

Published: 04 October, 2021

The Wine & Spirit Trade Association (WSTA) has called on the Treasury to freeze wine and spirit duty and extend the hospitality VAT reduction in the Autumn Budget to allow the country to climb out of the Covid-19 slump.

In a submission sent to the Treasury last week the WSTA appealed to the Chancellor to give British business and consumers a break, in the face of a slowing economic recovery, rising inflation, rising energy costs and surging fuel prices.

The submission was made in the wake of the Budget, which is taking place on Wednesday 27 October.

WSTA said that the impact of the pandemic, closure of the hospitality sector, Brexit and adapting to a new trading landscape has meant that businesses are facing record high prices, which are inevitably being passed on to increasingly squeezed consumers.

It highlighted the latest WSTA figures that showed that an average priced bottle of still wine has risen by 3% from £6 in 2020 to £6.18 in supermarkets and shops. For an average priced bottle of gin consumers were paying £14.65 a bottle in 2020, this has risen to £14.87.

The WSTA said that duty is currently so high that 55% of the average priced bottle of wine and 73% of a bottle of spirits, at 40% abv, sold in shops and supermarkets is now taken by the Treasury in tax and VAT.

The trade association said that the mounting pressures on the consumer purse and British business, comes ahead of a 1.25% rise in National Insurance which will hit next year and inflation forecast to reach 4%.

It added that freezing wine and spirit duty rates, instead of implementing tax rises in line with RPI, would ease the burden on consumers and help businesses and the hospitality sector to recover.

A duty freeze would also safeguard UK wine and spirit businesses, many of whom are SMEs, protect future income to the Treasury, and support a sustainable recovery for the UK’s hospitality sector, it said.

WSTA also highlighted that UK wine and spirit businesses support over 360,000 jobs across the supply chain as well as bringing in around £50bn annually to the British economy.

To further support the hospitality industry in its recovery, the WSTA is asking the Government to keep the lower rate of 5% VAT for hospitality, but also to broaden the scheme to include alcoholic drinks.

“After more than 18 difficult months, and with the prospect of rising prices and falling consumer confidence, we are calling on the Government to keep alcohol duty rates as they are until after it has completed its Alcohol Duty Review. Freezing wine and spirit duty at the Budget will give businesses and consumers a much-needed break, which will be vital for our sector’s the road to recovery,” said Miles Beale chief executive of the WSTA.

“We appreciate that the public finances are under tremendous pressure, but so are the businesses we represent – and that is why our ‘asks’ are modest. The country has to be allowed to recover from Covid, we need the Government’s backing to recover, to rise again and achieve our full potential.”

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