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Drinkers will face significant price increases under new tax rules as the duty on a bottle of wine rises up to 20% although a pint of beer will cost 11p less in the pub
From 1 August, all products will be taxed in line with alcohol by volume (ABV) strength, rather than different duty structures for different drinks. This means there will be fewer main duty rates, reduced from 15 to 6.
The Office for Budget Responsibility estimated that the changes to alcohol duty would raise £13.1bn in 2023-24 rising to £15.8bn by 2027-28 although the increase was delayed by four months.
The changes will see duty increase overall, with a typical bottle of wine with an ABV of 12% going up by 44p, which when combined with VAT, will see consumers paying an extra 53p.
Wine with an ABV of 15% will see tax rise by a total of 98p, according to the Wine and Spirits Trade Association (WSTA), the biggest tax rise on a standard bottle of wine for nearly 50 years.
Miles Beale, WSTA chief executive, said: ‘Among all this pressure the government has chosen to impose more inflationary misery on consumers on 1 August, with the biggest single alcohol duty increase in almost 50 years. Inevitably some won’t be able to stay afloat, with SMEs most at risk.
‘Ultimately, the government’s new duty regime discriminates against premium spirits and wine more than other products. Wine from hotter countries will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines. And, at the same time, you cannot reduce alcohol in wine like you can for some other products.’
Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, and a bottle of port will go up by more than £1.50. The total tax on a bottle of gin or vodka will go up by around 90p.
The only winners will be beer drinkers as the duty charged on draught pints will be cut by 11p while the price of Prosecco tax will be cut by 61p.
Drinks with an ABV of 3.5% will be taxed at a lower rate, but a tax on drinks with an ABV of over 8.5% will stay the same, whether it is wine, spirits or beer.
Announced at the Autumn Budget in 2021, the Chancellor claimed that the reforms will ‘modernise and simplify’ the duty system, which has not changed in 140 years.
In March’s Budget, Chancellor Jeremy Hunt announced that the freeze on alcohol duty would end in August and increase by inflation, at 10.1%.
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