WSTA warns customers of ‘double whammy tax grab’ to come
Consumers are being warned “to brace themselves” for the “double whammy tax grab” on drinks that is on the horizon.
The Wine and Spirit Trade Association (WSTA) has issued a warning of “substantial rises” days before the duty hikes imposed at the Autumn Budget come into effect on 1 February. This increases duty by RPI at 3.6% and introduce a new system taxing wine by strength, which will see alcohol duty on a bottle of gin increase by around 32p, with a wine of 14.5% abv, seeing a 54p increase.
It argues that duty on a 14.5% red wine has increased by 98p in just 18 months, following the initial changes introduced on 1 August 2023.
At the time, a temporary ‘easement’ was introduced for wines with an abv between 11.5% and 14.5%, however this mechanism will end on 1 February when the single amount of duty paid on wines between 11.5-14.5% abv will be replaced with up to 30 different payable amounts. This will affect around 85% of the wine on the UK market.
Miles Beale, chief executive of the WSTA said the government continues to claim that the tax hikes are part of their big plan to plug the black hole in the public finances, however the series of record-breaking tax levies were doing “the exact opposite”.
The latest HMRC figures show that alcohol tax receipts have fallen by £209 million between April and December 2024, compared to the previous financial year, which the WSTA says shows that the tax increases supresses consumer demand and reduces Treasury coffers.
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“There are no winners under the UK’s punishing alcohol tax regime – higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more,” Beale said.
Although the financial impact will be different for every business, he argued that some major retailers will be facing millions of pounds in losses, which will have a knock-on effect on producers and distributors “who will also find their profits plundered”.
“The result is a bitter blow for British businesses, large and small,” he said.
He pointed out that the new round of taxes on waste packaging that are coming round the corner amounted to a “seemingly never-ending assault on wines and spirit businesses”, which mean consumers “need to brace themselves to pay substantially more for their favourite products.”
The Extended Producer Responsibility (EPR) will include new waste packaging recycling fees which are due to come into effect in April. These are estimated to add around 18p to a bottle of spirits and 12p to a bottle of wine, the WSTA said.
