Wine and spirit drinkers will pay more but cost of weaker drinks has fallen as alcohol duty changes come into force today – but how much has YOUR favourite tipple risen by?
- Alcohol duty up on vodka, sherry, port and still wine and cans of cider and beer
- Britain has lost total of 5,736 pubs, restaurants, bars and cafes over past year
Drinkers face significant price hikes from today after tax increases saw the duty on a bottle of wine rise by 20 per cent and a bottle of port by 44 per cent.
Alcohol duty on bottles of vodka, sherry, port and still wine and cans of cider and beer all increased today – but fell for sparking wine and pre-mixed gin and tonic.
Chancellor Jeremy Hunt is also cutting the duty charged on draught pints across the UK by 11p this month in a major boost for pubs and draught beer drinkers.
But duty is up by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association.
Duty on 18 per cent cream sherry has gone up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port has gone up by more than £1.50. The total tax on a bottle of gin or vodka is now up by about 90p.
The new duty system – first set out by then chancellor Rishi Sunak, a teetollar, in 2021 – aims to encourage consumers to cut back by taxing all alcohol based on its strength, rather than the previous categories of wine, beer, spirits and ciders.
It comes as data revealed Britain had lost about one in 18 of its licensed premises over the last year – equating to a total of 5,736 pubs, restaurants, bars and cafes, according to a new ‘Hospitality Market Monitor’ from CGA by NIQ and AlixPartners.
Chancellor Jeremy Hunt is cutting the duty charged on draught pints across the UK by 11p
Mr Sunak, now Prime Minister, described the duty overhaul as ‘the most radical simplification of alcohol duties for over 140 years’, saying it was enabled by Brexit.
READ MORE What the price of a pint pays for
At March’s Budget, Chancellor Jeremy Hunt also announced that the freeze to alcohol duty would end on August 1 and increase by inflation, at 10.1 per cent.
But Wine and Spirit Trade Association chief executive Miles Beale said: ‘We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation, especially for food and drink, and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won’t be able to stay afloat, with SMEs (small and medium-sized enterprises) most at risk.
‘Amongst all this pressure the Government has chosen to impose more inflationary misery on consumers on August 1, with the biggest single alcohol duty increase in almost 50 years.
‘Ultimately, the Government’s new duty regime discriminates against premium spirits and wine more than other products.
‘Wine from hotter countries, like new trade deal partner Australia, will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines.
‘And, at the same time, you cannot reduce alcohol in wine like you can for some other products.
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‘Making wine isn’t an industrial process; reducing wine’s alcoholic content is limited, changes the product and is costly to carry out. Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength prescribed by law.
‘In the end the Sunak-Hunt changes to wine duty will reduce consumer choice and push up prices.’
He added that for spirits, consumers can expect at least a £1 increase on a bottle of gin or vodka and an increase of £1 per bottle of wine when duty is increased by 20 per cent – plus VAT.
The Treasury has said that more than 38,000 UK pubs will benefit from tax relief that effectively freezes or cuts the alcohol duty on beer poured from tap from today.
But the British Beer and Pub Association said brewers will pay 10.1 per cent more tax on bottles and cans of beer from Tuesday, meaning tax will make up around 30 per cent of the cost of a 500ml bottle.
Despite the draught freeze, the organisation said the tax increase on packaged beer will add an extra £225million of costs per year across the industry.
Scotch Whisky Association director of strategy Graeme Littlejohn said: ‘The 10.1 per cent duty increase is a hammer blow for distillers and consumers.
‘At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch Whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.
Prime Minister Rishi Sunak (right), who is a teetotaller, watches the Women’s Euro 2022 final at The Bishops Mill pub in Salisbury, Wiltshire, on July 31 last year, where he drank a lemonade
‘Rather than choosing to back an industry which the UK government promised to support through the tax system, the Government has chosen to impose the largest duty increase in almost half a century, increasing the cost of every bottle of Scotch Whisky sold in the UK by almost a pound and taking the tax burden on the average priced bottle to 75 per cent.
‘In a further blow, distillers will now face a further competitive disadvantage in pubs, restaurants and bars by being unfairly excluded from tax breaks available to beer and cider. Pubs and other on-trade businesses are about far more than beer and cider.’
But Mr Sunak insisted the changes would benefit British businessness.
He said: ‘I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.
‘Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.
Chancellor Jeremy Hunt, pictured with a pint at The Keep pub in Guildford, Surrey, in 2019
‘We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.’
Mr Hunt added: ‘British pubs are the beating heart of our communities and as they face rising costs, we’re doing all we can to help them out. Through our Brexit Pubs Guarantee, we’re protecting the price of a pint.
‘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.’
The average pint of lager in a pub now costs £4.47, a rise of 47p or 11.7 per cent in a year, according to figures from the Office for National Statistics this month. A pint of ale now costs £3.81 on average, an increase of 31p, or 8.8 per cent.
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