The new UK alcohol tax will come into effect on 1 February 2025 increasing prices for most wines, based on the alcohol content...

On 1 August 2023, a new alcohol duty legislation marked the first increase in Alcohol Duty in the UK since February 2019. The aim of this new legislation was to introduce standardised alcohol duty bands across all types of alcoholic products (beer, spirits, cider, still and sparkling wines, as well as other fermented beverages), with all tax rates calculated based on the litres of pure alcohol in the product, applied from 0.1% upwards.

This change reduced the number of tax bands on non-draught products from 15 to 8, which was supposed to simplify the duty, but in practice, it has made the calculation and provision for duty far more complex.

Within each tax band, the associated duty rate is used to calculate different tax charges for each 0.1% ABV increment on the label, which means that a 75cl bottle of wine with an ABV of 11% will incur a different duty tax to one with an ABV of 11.1%.

Recognising that these changes would have a significant impact on the wine industry, the government implemented a transitional period, or “temporary easement”, which meant that all still and sparkling wines between 11.5% and 14.5% ABV used an ‘assumed’ strength of 12.5% ABV when calculating duty to reduce confusion.

However, it was confirmed on 30 October 2024, that from 1 February 2025, the easement will cease and the single amount of duty paid on wines between 11.5-14.5% ABV (£2.67 per 75cl bottle) will be replaced with 30 different payable amounts according to the strength of the wine now declared at 0.1% volume increments. The duty rates set will also increase in-line with forecasted RPI inflation, which is currently estimated at 3.65%.

Your dedicated Regency Procurement Manager is always on hand to support you and your business during times of transition. If you would like advice or assistance, please get in touch and we can recommend the best course of action for your business to ensure minimal disruption.