The UK wine sector is preparing for price hikes beginning February 2025 following the introduction of new tax regulations, which are expected to affect both consumers and businesses alike. The changes include an expansion of the tiered tax system based on alcohol content, alongside a duty adjustment in line with inflation. The Wine & Spirit Trade Association (WSTA) has warned that these measures will directly impact the cost of wine for consumers.
The new tax structure, unveiled in August 2023, initially allowed wines with alcohol content ranging from 11.5% to 14.5% to be taxed at a standard rate of 12.5%. However, starting February 1, 2025, this temporary measure will come to an end. It will be replaced by a system featuring 30 distinct tax bands based on alcohol content. WSTA estimates that this will result in a 20% increase in duty on a bottle of red wine with 14.5% alcohol, equating to an additional 54 pence per bottle. Conversely, a bottle with 13.5% alcohol will see a 12% increase, while lower-alcohol wines, such as those with 11.5%, will benefit from a modest tax reduction of about 5%.
The new regulations come alongside an increase in packaging recycling fees, which will be implemented under the Extended Producer Responsibility system starting in April. This additional cost is expected to raise the final price of some bottles even further.
Industry representatives have voiced concerns about the added complexity of the new system, particularly for retailers managing large inventories. Business owners will need to accurately assess the alcohol content of each wine to determine the applicable tax, a process that could prove challenging. Some retailers have already begun notifying customers about the upcoming changes, with some offering to release or sell existing stock before the new rates come into effect.
The WSTA has pointed out that these price hikes are compounded by other rising costs for businesses, including higher National Insurance contributions and increased commercial taxes. Despite these concerns, health advocates have welcomed the reforms, claiming the tax structure encourages the consumption of lower-alcohol beverages, aligning with public health objectives.
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