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Prime Minister Rishi Sunak's plan to introduce a highly complex tax regime for UK wine importers will drive up prices, reduce consumer choice and tie small businesses into red tape, the industry has warned.
From February 2025, customs duties on wine will increase in twopence increments for every 0.1 per cent increase in alcohol content, a system that industry leaders have declared “impractical”, especially for small importers.
Sunak announced the changes in the 2021 spending review while he was Chancellor of the Exchequer, describing them as a benefit of Brexit and promising that they would lead to a “simpler, fairer and healthier” system.
However, the plans have sparked a backlash from the UK wine industry which supports more than 400,000 jobs and contributes £72bn in economic activity, according to the Wine and Spirits Trade Association.
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Matthew Hennings, whose small family business Hennings Wine in Sussex imports around 500,000 bottles a year and employs 22 people, said the new system would be “incredibly stressful” for his company.
“We will go from having two or three working teams to more than 30 teams,” he said. “I will have to hire another full-time employee to keep up with the paperwork, and even then it will be difficult.”
The rules will also make wine pricing a matter of guesswork, Hennings added, since the amount of alcohol in each bottle varies from year to year, depending on the weather, sometimes within the span of a year.
“For table wines that are stored in tanks for freshness and then bottled to order, the alcohol content may fluctuate, for example, from 11.2 percent to 11.8 percent over the course of one year, which will make pricing very difficult and unstable for For the restaurant trade,” he said.
The changes were first introduced in August 2023 but with an 'easement' meaning all wines between 11.5 per cent and 14.5 per cent alcohol by volume attract a flat tax of £2.67 per bottle. This covers 85 per cent of the 1.2 billion bottles sold in the UK last year. The easement expires on February 1 of next year.
The government has resisted intense pressure from the WSTA and industry players, including Majestic Wine and The Wine Society, to retain the facilities to avoid a backlog of red tape for the industry.
The new system has attracted criticism from across parties, including from prominent conservatives. Priti Patel, the former home secretary, said in a debate in Westminster Hall last March that the changes “increase red tape at a time when the government should be doing more to reduce it”.
Miles Bell, chief executive of the WSTA, described the rules as “ridiculous” and warned that they would lead to “significant” price increases, with the strongest 14.5 per cent ABV wines seeing a duty rise of more than 40p per bottle.
John Colley, chief executive of Majestic Wine, said ministers' claims that the new system was “simpler” were false. “This is simply not the case – in fact, the system in place before Brexit would have been much easier to administer,” he said after a Westminster Hall debate on March 7.
Steve Finlan, chief executive of The Wine Society, which estimated it would need to spend more than £400,000 upgrading its systems to accommodate the changes, said the decision to go ahead with the reforms was “completely out of touch with business reality”.
Kim Wilson, founder of North South Wines in Bicester, Oxfordshire, which imports about 15 million bottles a year and serves most of the major supermarket brands, said the shift to 0.1 per cent duty bands was “100 per cent unmanageable”.
She added that from old wine to old wine, the alcohol content can vary by up to 0.5 percent, depending on the weather and the fermentation process, requiring a new label and bar code for each one, which will lead to increased bureaucracy.
“You would need one full-time person to run an ABV business and two part-time employees in logistics — that's 8 percent of my workforce dealing with an ABV business, not to mention the daily distraction when we should be focused on growing the business — it's a lot of work,” she said. “Honestly stupid.”
The Treasury said liquor duty was frozen for a further six months until February 1 during the last Budget, meaning it was 10p lower than if the planned increase had gone ahead.
A spokesperson added: “We have engaged closely with the wine industry throughout the consultation period on landmark reforms to alcohol duty.”
