The UK government announces changes in alcohol duty, impacting tax based on a drink’s strength.
- Beverages with 3.5% ABV or below will face reduced taxation, while those above 8.5% ABV remain unchanged.
- Specific drinks, such as port, sherry, and vodka, will see significant tax increases per bottle.
- Sparkling wine receives a tax cut, despite previous higher rates compared to still wine.
- Tax on beer will rise in retail settings, but pub prices will be unaffected, supporting the hospitality sector.
In a recent announcement, the UK government has introduced alterations in alcohol duty taxation, aligning it with the alcoholic strength of beverages. These modifications reflect broader UK tax strategies and public health goals. According to the new duty system, drinks with an alcohol by volume (ABV) of 3.5% or less will incur a lower tax charge. However, beverages surpassing 8.5% ABV will remain at their current tax rate, irrespective of whether it is wine, spirits, or beer.
Further specifics reveal substantial tax hikes on certain popular drinks. The Wine and Spirits Trade Association (WSTA) noted that port and sherry are among those subjected to the highest increases, with an additional £1.30 and 97 pence per 75cl bottle, respectively. Vodka will experience a tax rise of 76 pence per 70cl bottle, and a typical bottle of red wine, with an average ABV of 12%, will increase by 44 pence.
Contrasting the higher duties on some wines and spirits, sparkling wine will benefit from a reduced tax rate. Previously taxed at a higher rate than still wine, a 12% ABV bottle of sparkling wine will now see a reduction of 19 pence.
The impact on beer taxation presents a dual approach. While retail prices will increase by 4 pence, there will be no additional tax when purchased in pubs. This measure is designed to support the hospitality industry, a point emphasized by Prime Minister Rishi Sunak, who mentioned the intent to “reduce the price of a pint.”
The introduction of this duty restructuring is part of a broader governmental initiative aimed at modernizing alcohol taxation. Chancellor Jeremy Hunt stated, “The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low-alcohol drinks and boosting growth in the sector by supporting small producers financially.” Despite the changes being heralded as forward-thinking, the WSTA criticized them as adding “more inflationary misery on consumers.” They argued that the new regime disproportionately impacts premium spirits and wines compared to other alcoholic products.
The reform in alcohol duty underscores the UK government’s effort to align with modern consumption trends while facing criticism from industry representatives.
