UK wine duty revenues hit record £4 billion

The UK’s wine industry generated a record £4 billion in tax revenue in the past 12 months while spirits revenues increased by £54m in the past six, despite a freeze on wine and cut on spirits duty in 2015.

Wine duty revenues generated hit £4 billion over 12 months for the first time, bringing in a record £4.037bn to September 2016

According to the Wine and Spirits Trade Association (WSTA), wine duty income increased on the previous year by £139m (+3.6%) from April 2015 to March 2016 inclusive, following a freeze on wine duty in 2015.

Following the cut in spirits duty in the 2015 budget, spirits duty income increased on the previous year by £125m (+4.1%) from April 2015 to March 2016 inclusive.

It follows a ‘Drop the Duty’ campaign by the WSTA, TaxPayers’ Alliance and the Scotch Whisky Association in 2015 which contributed to a freeze of wine duty and 2% cut to beer, spirits and cider. This year, the chancellor froze duty on beer and spirits and lifted a freeze on wine duty in the 2016 Budget.

In total, duty revenues generated by wine hit £4 billion for the first time in the past 12 months, bringing in a record £4.037bn. In the last six months to September, spirits has generated £1.48bn, up £54m on the same period last year.

These latest figures, according to the WSTA, prove that cutting tax on alcohol is not only good for the consumer, but a prudent financial move for the government, demonstrating the need for another freeze, or preferably 2% cut, on wine duty.

“Evidence shows that freezing or cuts to duty are not only popular, but have led to greater revenue for the Exchequer, more jobs, greater investment by the industry and a better deal for consumers”, said Miles Beale, chief executive of the Wine and Spirit Trade Association.

“The industry’s size and contribution to economic activity is regularly vastly underestimated. Through distilleries, vineyards, bottling plants, logistic companies, wholesalers, distributers and retailers it supports nearly 600,000 jobs in the UK, contributes £45.5bn in economic activity and pays over £15.5bn in duty, VAT, corporation and employment taxes.”

The UK currently pays among the highest duties on alcohol in Europe, with 55% of the average bottle of wine in shops and supermarkets made up of tax, rising to 74% for a bottle of spirit.

“The industry has faced difficult trading conditions recently with the fall of the pound and the uncertainty of trade post-Brexit”, added Beale. “Now more than ever the industry asks for government’s support to allow the wine and spirit industry to invest, grow exports and create more jobs. And these figures show that reducing the wine and spirit industry’s high duty burden is an effective way to do that.”

In 2015 wine and spirits industry combined contributed £15.5bn to the Treasury, enough to fund the cabinet office six times over or four DEFRAs.