Wine and spirit duty freeze brings windfall for Treasury

General | 30 June, 2018

A freeze on alcohol duty at last November’s Budget has given the Treasury a £67 million boost in just four months.

The latest HMRC figures show collections, from December to April, of £3.291 billion on wine and spirit duties, up from £3.224 billion on the same period last year – a 2% increase.

Wine and spirit duty collections continue to increase to record levels. The Treasury is set to cash in on a projected £7.7 billion from wine and spirit revenue for the financial year 2017/18, up £140 million on the previous year.

The Treasury windfall comes after the Wine and Spirit Trade Association called for government to back the UK’s wine and spirit industry and help ease pressure on cash strapped consumers by freezing the UK’s excessive duty rates.

Duty hikes were expected at the November Budget but politicians listened to the WSTA, business and consumer concerns and scrapped planned duty rises.

The freeze in duty meant savings of 8p per bottle of wine, 11p on sparkling wine and 31p on an average priced bottle of spirits for consumers.

The WSTA argued that a freeze would be a win/win for both the Treasury and the wine and spirit industry, and according to latest HMRC figures, the WTSA has been proven right.

The numbers show that between December 2017 and April 2018, all alcohol duty collections – including wine, spirits, beer and cider – increased by 2% on the same period last year, bringing an additional £86 million to Treasury coffers – despite the decision not to increase the rate of duty.

Of this, £67 million came from wine and spirit sales alone, meaning that the wine and spirit industry accounted for 78% of the increase. Wine collections have so far increased £33m (+2%) and spirit collections increased £34m (+2%).

Wine remains top of the revenue collections table, totalling 37% of duty collections but accounting for only 18% of sales by volume.
It is only the second time in 15 years that wine duty has been frozen.

Miles Beale Chief Executive of the Wine & Spirit Trade Association said:

“We have always said a freeze to alcohol duty is a win/win for both the Treasury, the wine and spirit trade and consumers. We hope the latest windfall to Treasury coffers coming from the Budget freeze encourages the Chancellor to continue to stay in touch with what consumers want and support an industry which is proving to be a real asset to British business by rebalancing the UK’s excessive duty rates in this year’s Budget.”

In March, the WSTA met with the new Exchequer Secretary to the Treasury, Robert Jenrick, to highlight how important it is for the UK to redress its excessive alcohol duty rates.

Following Brexit’s impact on the pound, and rising inflation, the wine and spirit trade have faced a tough trading landscape.

A cut or freeze will save great British wine and spirit businesses – which support over 550,000 jobs – thousands of pounds, which can help businesses to invest, grow and create even more jobs.

To help people understand more about alcohol taxation the WSTA have created a video which can be viewed here.