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HMRC downplays wine duty pain

Next month, duty reforms will tax alcohol in the UK according to abv, with six standardised alcohol duty bands across all types of alcoholic products: <1.2%, 1.2% and <3.5%, 3.5% and <8.5%, 8.5% and <22% over 22.

The changes will, HMRC promises, make the system “simpler, fairer and responsive to new products entering the market as consumer tastes evolve”.

• Read more: WSTA tells government 'It’s not too late to scrap hikes'

However, the communication fails to highlight the later changes for wine, which will be taxed incrementally, by 0.5% abv, between 11.5% and 14.5%, as of 1 February 2025.

These are where swingeing duty rises will hit. Criticism from the industry has been swift and hard, with Hallgarten & Novum Wines’ MD Andrew Bewes describing the changes as “cataclysmic for trade”.

“The government has not thought about this in any way, shape or form. The reality is that hospitality businesses are left with fairly stark choices, and I fear that the duty changes will not do anything to help stem the flow of businesses closing their doors up and down the country,” he told Harpers.

In its statement, HMRC mentions the temporary easement mechanism for wine businesses, which would treat all wine with an abv of between 11.5% and 14.5% as if the strength were 12.5% abv until February 2025.

However, what it fails to mention is the incremental increases, which will disproportionately affect higher abv wines.

Add to that the upcoming inflationary alcohol duty increase, which is also set to add 10.1% to alcoholic products on 1 August this year, and the industry is facing a stark future.

Again, it is wine that is set to be hit hardest. The 10.1% inflationary increase excludes draft products, while the new duty reforms also include a provision for this section of the industry.

“To support the hospitality industry, and recognising the vital role played by pubs in our communities, there will also be a reduced rate for draught products – known as Draught Relief”, HMRC said in its latest statement, which will “reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23%”.

Technically, this reduction would apply for qualifying wine-based, spirits-based and other fermented products, sold in pubs, bars and restaurants. However, this accounts for a tiny proportion of wine products.

For many, it will be difficult to square the upcoming system for wine, with the statement from exchequer secretary to the Treasury, Gareth Davies, who said leaving the EU has enabled the UK government to “make sure our alcohol duty system works for us. From next month the whole system will be simpler – the duty will reflect the strength of the drink”.

Back in May, the Wine and Spirits Association (WSTA) chief executive Miles Beale expressed some hope that the temporary easement will be extended, or made permanent, after February 2025. Undoubtedly, this will be a focus for the WSTA until then.

• HMRC
• Alcohol Duty
• duty reforms