Wine and Spirit businesses are calling on the Government to freeze alcohol duty, for at least two years, to help towards plugging the black hole in the public finances.
Alcohol sales in the UK have declined following last year’s largest alcohol tax hike for 50 years, which saw more than 10% duty increases for spirits and beer and at least a 20% increase in duty for most wine.
The latest HMRC figures show that between September to August, year on year, alcohol duty increases have resulted in a massive £1.3 billion (10%) drop in revenues to the Exchequer – which works out at almost the same amount as the winter fuel allowance savings.
The Wine and Spirit Trade Association (WSTA) is asking the new Labour Government to freeze duty for at least two years to allow sales to recover and in turn boost Treasury coffers.
In the first full year of receipts* wholly under the new alcohol duty system introduced on 1 August 2023 and which saw double-digit duty hikes in duty, alcohol duty receipts received by the Exchequer were down over £1.3 billion. The most pronounced decrease was for receipts from spirits which plummeted by £757 million. Despite an even larger increase *c.20%, wine receipts were also down by £238 million, while beer and cider receipts were down £320m and £24 million respectively.
The WSTA warns that if duty rates continue to rise and sales continue to fall Government doesn’t just lose out on duty receipts, VAT receipts will be down too.
Recent history has shown that freezing excise duty can reverse such trends and lead to increased sales, decreased costs for consumers and increased revenue to the Exchequer.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said:
“Last year’s damaging reforms to the alcohol excise duty system, including the largest single duty hike in almost 50 years, have hit businesses, consumers and the Government purse. Prices have risen, sales are down and so is duty income by over £1.3bn.
Whilst it’s good news the Chancellor has more financial headroom as HMRC’s overall receipts show a £8.9 billion windfall, this could have been boosted further – by almost £1.5 billion – if the previous Government had not increased alcohol duty by double digits.
The Prime Minister and Chancellor have been unequivocal in setting out the need to achieve economic growth and in signalling that the pressures on public expenditure mean difficult decisions will have to be taken at the Budget on 30 October. For alcohol duty the decision need not be difficult. Increasing duty – which is the Government’s inherited policy – will serve only to reduce income to Government further at a time it can least afford it.
Freezing duty for at least two years and avoiding imposing damaging additional costs and red tape by maintaining the wine easement, will benefit businesses and consumers by driving growth and keeping prices stable while optimising Government income. In short, a freeze won’t cost Government anything, but it will be financially beneficial to the Treasury, British business and consumers.”
As part of its Autumn Budget submission the WSTA has also called for called for Government to confirm its commitment to ending costly duty stamps for spirit drinks, agreed by the previous government, but yet to be enacted. It has also called on the temporary easement for wine to be made permanent as a matter of urgency.
Another duty increase for wine is already due to kick in from 1 February 2025, when wine tax will be further complicated by removal of the easement, adding a huge administrative burden for British businesses – especially small retailers – which will lead to another round of price increases.
Excise Duty on wine between 12.5% abv and 14.5% abv is currently calculated according to a temporary easement mechanism, introduced as part of the new duty system last year. However, the easement is due to be removed in February 2024 when the single amount of duty paid on wines between 11.5-14.5% abv – £2.67 – will be replaced with up to 30 different payable amounts. For a bottle of wine at 14.5% abv this will see wine duty increase from £2.67 a bottle to £3.10.
In their Budget Submission to Treasury earlier this month the WSTA has called for:
- a freeze to current rates of alcohol excise duty for at least two years
- as a matter of urgency make permanent the temporary
- confirm and enact the end of the duty-stamp regime for spirit drinks
Below are the lates figures for the Office for National Statistics (ONS) shopping basket which compare the price changes the month before the double-digit duty increases last year compared to this month’s average prices.
| Price | Jul-23 | Aug- 24 | Difference £ | Difference % |
| Fortified wine 70-75cl | £10.25 | £11.94 | £1.69 | 16 |
| Pre-mixed spirit drink 250-330ml | £2.12 | £2.16 | 0.04 | 2 |
| Cream liqueur (14-20%) 70cl-1litre | £17.78 | £18.44 | 0.66 | 4 |
| Champagne bottle 75cl | £32.61 | £33.28 | 0.67 | 2 |
| Red wine 75cl bottle | £7.20 | £7.73 | 0.53 | 7 |
| Bottle of gin 70cl | £15.98 | £17.24 | 1.26 | 8 |
Source: ONS Shopping basket data released 18 September 2024.
*HMRC duty receipts appearing received in a given month contain receipts for alcohol removed from excise bond the previous month, so while the new duty system came into effect on 1 August 2023, receipts from September 2023-August 2024 most accurately reflect the receipts in the first full 12 months of the new duty regime. Source: HMRC duty receipts data released on 20th September 2024.
Featured Press
