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Soapbox: Stirring up a duty storm

Published:  07 September, 2023

Bordeaux winemaker and British expat Gavin Quinney says UK duty is ‘even crazier’ than we first thought.

With the harvest across Europe well under way, the recent UK duty hikes should be off the agenda for anyone focused on bringing in the grapes. Yet, since the 20% increase this August on duty for still wine to £2.67, plus VAT for any bottle that’s 11.5-14.5% abv, it’s bizarre how one’s perspective can be influenced by PM Sunak’s new system of taxing wine on the level of alcohol.

That’s if you’re selling wine in the UK, of course and – granted – I’m in the unusual position of growing, making, bottling the stuff in France and delivering to people at home in the UK and to restaurateurs like Rick Stein. We pay the duty on the way through, via London City Bond.

First, the good news: sparkling wine. We have hand-harvested the grapes for our Crémant de Bordeaux and, as long we don’t overdo the second fermentation in bottle, we should be able to label it at 11% abv. Hooray… that’s £2.35 UK duty, plus VAT a bottle at the new level, compared to the old whack on fizz of £2.86 plus VAT.

It will be far trickier, alcohol-wise, for our 2023 dry whites and rosé. Still wines at 11.4% abv (to be labelled quite legally in the EU at 11% abv to get that lower UK duty of £2.35) could still be possible for us this year, but the weather has been quite sunny of late. So, with the riper grapes we might have to fall in line with paying the higher, catch-all tier of £2.67.

I would imagine retailers, importers and their producers are also targeting the 11% abv rate (or under) for sparkling and still wines that retail for less than around £15 a bottle. Fine if they do, though I’m not sure how they legally strip or spin out the alcohol without having a watering-down or flavour-losing effect.

Far worse may be to come if Defra’s recent proposals go ahead to “allow imported wine to be carbonated, sweetened, de-alcoholised in market”. Consumers won’t be able to move for manipulated, lower cost, Britain-based blends, not least some new-look bubbles.

“This will enable our industry to create more product lines for the UK market/tastes and give consumers more choice,” the government says. Oh, the joy.

From three duty bands to 27 – to 135

Until recently, I didn’t know that for wines sold in England, you can now label the alcohol level to one decimal place, eg 12.2% abv, 12.3%, 12.4%.

In the EU, we have to label with either the full percentage figure or in half percentage points, such as at 12% or 12.5% and this labelling rule is still in use in the UK, of course. A leeway of 0.5% is allowed, for both the EU and new UK label options.

So, while most of us in the wine trade have been saying it’s crazy for the UK government to replace the three previous bands of duty on wine between 8.5% and 22% abv – for still, sparkling and fortified wine at £2.23, £2.86 and £2.98 respectively – to a system with 27 new bands, it’s actually worse than that. There are 135 new bands between 8.5% and 22% if we adopt the UK label initiative.

As a quick explainer, wine between 8.5% and 22% abv has a new UK duty rate of £28.50 per litre of pure alcohol. If you multiply the volume of wine, eg 0.75 litres or 75cl for a bottle, with the level of alcohol, eg 12.2%, 12.3% etc, and then multiply this by £28.50, you obviously get a different rate for every decimal place. There are 65 different duty rates between 8.5% and 15% alone and the temporary fixed rate of £2.67 duty for wines in this bracket comes to an end on 30 January 2025. That’s really not far off.

If we include lower-alcohol wines from 1.3% (wines from 3.5-8.4% abv are taxed at £24.77 and 1.3-3.4% abv at £9.27 per litre of pure alcohol), from 1 February 2025 there will be over 200 bands of duty on wine from 1.3% to 22%, according to the current UK government guidelines, if you adopt the newly introduced UK label rules.

This, by way of a recap, was the government’s press release on 1 July. Exchequer secretary to the Treasury Gareth Davies said: “Because we left the EU, we can make sure our alcohol duty system works for us. From next month the whole system will be simpler – the duty will reflect the strength of the drink.”

Three bands of duty being replaced by scores of new UK duty rates doesn’t comes across as ‘simpler’. Not even a tiny bit.

For Quinney’s ‘Guide to UK duty hikes on wine’ visit