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Proposed Changes to Wine Duty Rates

@Mandarin is right - as another public servant the scale of response is usually directly proportionate to the volume of complaints, rather than the severity of the issue.

This is quite frustrating and in some cases a little sickening (because those inclined to complain are rarely those in real need) but it is true, and on an issue such as this (where I don’t think complaints are removing resource from dealing with a more serious issue) I’d echo the calls to write to MPs.

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I can totally understand the anti-Brexit views - I am a europhile, I did not vote for Brexit and hate the effects, one of which is for us as wine enthusiasts to spend too much time on how we ended up in this situation/mess/disaster; that will be for the historians to document.

I welcome the thread as a focus on what is wrong with this legislation for us as oenophiles, the disaster it’s about to be for small businesses and the untruths that were said on the day by the chancellor. As the Society’s CEO has clearly detailed at the start of the thread, the effect is serious and not at all ‘simple’. While it can be dressed up as making ABV the defining guide for charging duty, I have yet to see consistent evidence that this is the case. ‘Red Tape’ has always been the bête noire of the governing party, yet our retailers are about to be swamped by it. Wine drinkers have again been the easy target of the government, who have done very little to realise any benefits whatsoever from the massive changes to our ways of trading with the world.

I agree with Steve Finlan and the WSTA and will be doing something I’ve not done for a very long time; I will be writing to my MP and making as much noise as possible about yet another poorly thought out tax rise.

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Interesting paper by the Scotch Whisky Association about the unfairness of the new proposals. For example:

The principle the Chancellor set out – “the stronger the drink, the higher the rate” – will continue to discriminate against distillers. The decision to base future taxation on alcohol strength, rather than alcohol content, is misguided and wrong. The proposals embed the mistaken belief that lower abv products are somehow better, or less harmful, than higher abv products. They ignore the fact that a 4% abv pint of beer or cider contains 2.3 units of alcohol – more than a typical spirts-based cocktail with 2 units – and proceeds to tax alcohol served in this way less. The proposals penalise the vast majority of people who consume alcohol responsibly when they choose to enjoy a spirits-based drink over other alcohol. And they would mean spirits producers would continue to bear a heavier tax burden than other alcohol producers, which penalises Scotland, given that 92% of all UK spirits are produced or bottled in Scotland.

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@Tannatastic this is a simple calculator which shows costs side by side

https://www.cellarexchange.com/tax_calculator.html

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I have mixed feelings about this issue.

Firstly I recognise and support the need for increasing taxes, carefully, in the right way and at the right time. Duty will always be an easy hit.

I would argue the new approach is both simple and fair. The stronger the ABV of wine, the higher the duty.

But the impact of the transition to the new arrangements is less fair, with an overnight change and disproportionate effect on some wine strengths when compared to current duty levels.

As for the objective of ‘reducing red tape’. Well that is nonsense, and I have huge sympathy for the industry - particularly the small players for whom this will be disproportionately burdensome to prepare for and administer.

Most consumers buy their wine duty paid - this change will be completely invisible to them in terms of the various elements of cost making up the final price, apart from them seeing an increase in price.

It will be interesting to see what happens to prices. A 14% abv wine currently retailing at £12 will become £12.58, other things being equal.

So the question becomes whether the retailer still charges £12 by absorbing the cost, charges £12.58 by passing it on it full - or takes the opportunity to increase prices to £13…and with costs of implementing change, increased shipping costs, extra national insurance costs, I can guess which it’ll be.

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There is a post on this thread showing item-by-item comparisons of tax before and after the changes. Not sure how to directly quote the post from another thread.

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Hi All,

Picking up on the request for a bit more info and a template to use when contacting MPs etc, please find below the following resources:

Our trade association, the WSTA have put together an information hub that is openly available. This contains both a quick briefing and a template. Link here - Alcohol Duty Review: Member Campaign Hub - The Wine and Spirit Trade Association (wsta.co.uk)

I’ve pulled across some of the info from the template document which might help.

Why are we asking you to write to your MP?

The Government has proposed a new system to calculate alcohol duty (tax) which unfairly places a significant financial burden on to the wine and spirit sector. As COVID and Brexit disruption continue to impede the economy, we are concerned that wine and spirit businesses would have little choice but to raise the prices in order to keep afloat, with the industry already facing sky-high bills.

With alcohol duty set to increase by 30% for some products, we would greatly appreciate your support to ensure that prices of our drinks are kept down by advocating for a reduction in alcohol duty for wine and spirits.

We believe it is vital that both the wine and spirit industry and consumers work together as a collective voice if we are to achieve change, and we would be grateful if you could support us by emailing the below email to your local MP. Do personalise the highlighted boxes within the letter as you see fit.

We’d love to know when you write to your MP, so please copy in Sophie (Sophie@wsta.co.uk) when you email.

Find your MP

You can find your MP’s details by inputting your postcode, here: https://members.parliament.uk/members/commons

Draft email

Subject: Support our wine & spirit industry! Cc: Sophie@wsta.co.uk

Dear [Name of MP],

I am writing to highlight my concern over the Government’s proposed new system to calculate tax on alcoholic drinks. I understand from media stories that, under the Government’s latest proposals, the lowest alcohol duty rates, which apply to cider and beer (9 and 19p per unit), are going to fall while the much higher rates will remain high for spirits (29p) and increase significantly to 26p for wine. This would mean that over 70% of all wine, 80% of still wine and 90% of red wine would increase in price!

As one of the UK’s more than 30 million UK consumers who enjoys wine, I was expecting the outcome of the review to make tax on alcohol fairer. But these proposals would do the opposite. They would continue to favour cider and beer over wine and spirits. At a time when the cost of living is rising sharply thanks to rising inflation, increases in household energy bills and food prices, it’s a terrible idea to choose to raise taxes, and particularly to penalise wine with such significant duty increases.

As my local MP, I implore you to urge the Chancellor Rishi Sunak and Treasury Minister Helen Whately to change their proposed plans to reform the Alcohol Duty system.

Yours sincerely,

[Name]

[Post code]

Hope that helps? Do let me know if I or the WSTA can provide more information.

Simon

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If anyone wants to give input into HM Treasury’s wine duty rates consultation, they should do it soon as it closes at 23:45 this Sunday.

Sent it.

Although shan’t hold my breath for anything meaningful to come of it. My MP (Mark Harper, Con) spends more time trying to further the interests of anti-vaxxers than doing much else.

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Also sent, also don’t think my MP will do anything but hopefully as said earlier in this thread significant numbers will make them think a bit more.

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@SteveF, Alongside the great work on lobbying the Government and our MPs, I also assume that you would advise those that hold wine in bond think about moving their stock to ‘duty paid’ prior to April. I also wonder whether an option exists to pre pay duty on wines such as the Xanadu prior to its arrival later this year?

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That’s a good suggestion…I’ve already done it on some of mine, but no harm in alerting others.

I would doubt if there is an option to pre pay duty on wine not already in the UK though.

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The changes aren’t effective until February 2023, which means the Rhone 2020 EP offer will be affected when they arrive.

That’s a hit for the 16% Châteauneufs you see knocking around sometimes…

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Thank you. That gets a few more EPs through the door before the rates arrive.

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If you want to have the details of the proposed changes here are some tables produced Gavin Quinney of Chateau Bauduc which are illuminating. The Treasury is “consulting” on the proposals and the consultation closes on 30th January. Please send your comments to
HMTVATandExcisePolicy@hmtreasury.gov.uk

Existing v proposed new duty rates per litre of pure alcohol

The Government’s consultation document runs to 50 pages or so, so here’s a screenshot of the current duty rates and the proposed changes from page 31. Do not be fooled into thinking that taxing wine with a single figure ‘per litre of pure alcohol’ is a simplification of the duty rates.

Existing v proposed duty rates on wine in reality

Just about everyone in the wine trade is saying it makes no sense to introduce 27 different duty rates – one for every 0.5% ABV – to replace the three bands currently. It’s a red tape nightmare in the waiting.

UK wine duty revenues up 62% on same volume as 2008

The volume of wine consumed in the UK is around 1,750 million bottles (or equivalent) per annum on average – this is the amount, normally expressed in hectolitres, released from customs and recorded by HMRC. Note that 72% of that wine comes through customs-controlled, bonded warehouses and the duty collected by them from their trade customers. (Several wine merchants have said that the new duty proposals are ‘unworkable’.) Sparkling wine accounts for 200 million bottles, still wine 1,600 million. 2020 saw huge numbers being released from bond, with a stark contrast between ‘home’ sales v on-trade of course.

Wine leads the way in duty receipts

Wine duty revenues have contributed considerably more to the Exchequer than 12 years ago – up 62% from 2008. At that time beer duty receipts were higher than wine, a position that has been completely reversed.

Comparing wine duty per bottle across Europe – still wine

It may not be surprising that wine-producing countries tax wine quite lightly in their own back yard. Only VAT applies in many states – and note there’s VAT on wine and the duty where duty is charged. It is, however, worth comparing the level of duty in the UK with, say, Belgium, the Netherlands and Denmark. Worse, the proposed new UK duty bands would put wines of 14% ABV at the highest rate in Europe (£2.72).

Sparkling wine duty across Europe

Some countries levy higher rates of duty on sparkling wine than still, such as Germany, Belgium and the crazy loons in authority in Ireland. The UK Government intends to bring sparkling wine duty down to the same level as still wine, which is welcome. (It’ll still be comparatively high though.)

UK charged 63% of all wine duty in the EU in 2020

In his new year message, the Prime Minister said: “From simplifying the EU’s mind-bogglingly complex beer and wine duties to proudly restoring the crown stamp on to the side of pint glasses, we’re cutting back on EU red tape and bureaucracy and restoring common sense to our rulebook.”

In real terms, the UK collects far more in wine duty than the rest of Europe put together. In 2020, when the UK was in transition until the end of the year before leaving the EU, the UK Government took 63% of all wine duties paid across the EU.

Government revenues from wine duty in 2020 across the EU

Here’s a table. This uses the average exchange rate in 2020 of €1.125/£1 – in 2022 the UK will probably exceed 66%, though it is outside the EU of course.

Table of wine duty per bottle across Europe

Here are the figures used in the maps above.

UK duty rates on alcohol since 1995

The duty on wine went up by 100% from 2000 to 2020, more than any other category of alcohol. The freeze on wine duty from 2019 was most welcome and resulted in higher takings for the Treasury – see the tables for duty revenues above. Hopefully, the message that sensible taxation can lead to higher revenues will get across.

Finally, no wonder the Australians are up in arms about these proposals – the UK duty increases will wipe out any saving of the EU tariff of around 7p a bottle with a new Free Trade Agreement. For a perspective on that 50p extra duty on a wine at 14% ABV, 87% of wine from Australia in the UK is shipped ‘unpackaged’ and bottled in Britain, and the declared export value of that 87% – the bulk wine itself, or ‘free on board’ ex-Australia – is less than 55p a bottle. Source: Wine Australia.

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In short the presentation of the proposals was made up of a series of lies to gloss over their overtly political nature. No longer shocking unfortunately.

There is a letter in The Times today for those that haven’t seen it.

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Boris Johnson’s 2022 new year message - includes this lie, as indicated by @RobertSedgwick .

“From simplifying the EU’s mind-bogglingly complex beer and wine duties…”

I had to go and check he actually had the temerity to say this, but yes, it’s on gov.uk - Prime Minister pledges to build on Brexit achievements in 2022 - GOV.UK (www.gov.uk)

He deserves all the flak he’s currently getting and more. Lies, more lies and anything Boris says. I mustn’t write any more or it’ll be full of expletives.

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Boris Johnson? Lies? In the same sentence? Never!

Summary of the week to yesterday (is normally a whole week, but too much)

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In normal circumstances, you just wouldn’t be able to invent this, it’s just so awful. Even Private-eye couldn’t write these things - wouldn’t be believed.

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