From 1 February, wine businesses and consumers across the UK will face a tax rise of more than £175 million as new duty rates kick in, coinciding with the end of wine easement relief.
Compounding the burden is that companies will face increased administrative costs under the rolling fee system, inevitably leading to higher prices.
“Make no mistake: this is a tax increase on consumers and a new burden on businesses,” says Miles Bell, chief executive of the Wine and Spirits Trade Association (WSTA). db.
The Treasury's overhaul of wine tax targets bottles with an alcohol content of between 11.5% and 14.5%, a category that accounts for 85% of all UK wine sales. This transformation introduces a labyrinthine structure of 30 duty charges within this range.
For the UK's 33 million wine consumers, the impact is clear: higher prices. For example, a 14.5% red will see excise duty rise from £2.67 to £3.21 per bottle – a significant jump of 20%. Taking into account increases from August 2023, tariffs on the same bottle will rise by 44%, or 98p, in just 18 months.
Financial impact
“History shows that consumers are price-sensitive, so in the long run, this will stifle demand and reduce choice,” Bell says. “The financial impact will be different for each business, but it is estimated that some major retailers will face multi-million pound losses.”
This applies to the world's oldest wine club, The Wine Society, which has exclusively revealed the cost of tariffs on its business db In December 2024.
“The duty as a whole will cost us in the region of £3m to £3.5m (in 2025),” chief executive Steve Finlan said.
Duty cost
For the wine association, the tariff increase is part of broader financial pressure. Costs are rising: £1.3m from the government's extended producer liability scheme, £400,000 from higher National Insurance contributions, and a further £400,000 from rate rises as relief tapers off.
In addition, a review of staff salaries will cost £400,000. Together these pressures add up to around £5.5m in additional costs for a company that was expected to make profits of £2m last year.
“If we do nothing, we will face a £3.5m hole,” Finlan said of the challenge ahead. He was frank about the broader implications for the industry, especially for small businesses. “We'll manage because we're big enough and we're mutual, I say, so we can make easier choices. But when you get to…I don't know how (the small independents) will be able to make their way through.”
Price increases
Retailers, striving to protect their customers from these spikes, may turn toward lower-alcohol wines. While this mitigates costs, it risks narrowing the range of higher-value wines, potentially leaving consumers without some of their favorite wines.
“For smaller independent retailers, the administrative burden of calculating the new fee system will be hit hard, and if they want to maintain consumer choice, they will have no choice but to charge their customers more,” Bell says.
When consulted on the alcohol duty review, the WSTA called for a simpler solution: linking two tax bands at a middle point, benefiting the Treasury, businesses and consumers alike.
“The WSTA has had extensive interaction with many of the governments who have been running the show since Rishi Sunak, as Chancellor, first announced a consultation on how to tax alcohol,” Bell says.
The government refused to listen
The introduction of the now-expired easement was arguably an implicit admission by the government that the scheme was fundamentally flawed.
“The WSTA took every opportunity with MPs, responsible ministers and the media to call for the easement to be made permanent to ensure the government was fully aware of the financial implications. They chose not to listen and refused to consider any change to Sunak’s original plan,” says Bell.
The Battle of Duty has coincided with a particularly turbulent period in politics, with a series of rapidly changing governments and policymakers.
This government is clearly reluctant to do much about legacy policies that are already baked in and ready to go, but the WSTA may have more scope to influence the agenda of new policies to come.
While this government is reluctant to untangle old policies already underway, it may offer the WSTA an opportunity to influence new policy discussions on the horizon.
“We will focus on working with ministers and officials to help formulate a trade strategy that will boost British business and we hope they will recognize and take seriously the trade that contributed more than £76 billion in economic activity in 2022, and which it generated,” Bell concluded. “Gross value added (GVA) to the UK economy is more than £22 billion and supports 413,000 jobs.”
New prices (starting 02/01/2025)
Wine % ABV Charges per bottle now £ Charges per bottle from 01/02/25 Difference £ Difference % 11.0 £2.35 £2.43 £0.08 3.3 11.5 £2.67 £2.54 – £0.13 -4.9 £12.0 £2.67 £2.65 – £0.02 £ -0.8 12.5 2.67 £2.76 £0.09 £3.4 13.0 £2.67 £2.88 £0.21 £7.9 13.5 £2.67 £2.99 £0.32 12 14.0 £2.67 £3.10 £0.43 16.2 14.5 £2.67 £3.21 £0.54 20.3 15.0 £3.21 £3.32 £0.11 £3.5
750 ml
Compare products
Product Type Current customs duty per bottle as of 02/01/2025 Difference % Change Vodka 37.5% abv 70cl £8.30 £8.60 £0.30 3.6 Gin 40% 70cl £8.85 £9.18 £0.32 3.6 Sparkling wine 12% abv 75cl £2.67 2.65 -0.01 £ -0.5 Still wine 14.5% abv 75cl £2.67 £3.21 £0.54 20.2 Sherry 15% abv 75cl £3.20 £3.32 £0.12 3.6 Port 20% abv 75cl £4.27 4.43 pounds £0.16 £3.6 Spirit based liqueur 17% abv 70cl £3.39 £3.51 £0.12 £3.6 G&T 5% abv 250ml £0.31 £0.32 £0.01 3.6 440ml Cider Can 4.5% off Trade £0.19 £0.19 0.01 3.6 pints of cider 4.5% on trade (draft) £0.22 £0.22 – £0.00 -1.7 440ml beer 4.5% off on trade £0.41 0.43 £0.02 3.6 pints of beer 4.4% on trade (Draft) £0.47 £0.46 – £0.01 -1.7
Alcohol duty hike – GOV.UK (raised by 3.65% – RPI expected Q2 2025)
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