Important Update regarding Alcohol Duty Changes: What You Need To Know
The first budget of the Labour Government will be announced on Wednesday, October 30, 2024. This budget includes updates to the Alcohol Duty legislation. What you need to be aware of:
Important Points
- Alcohol duty on non-draught drinks will increase from February 1 2025, in line with the RPI inflation forecasted rate of 3.65% during the second quarter of 2025.
- On this date, the temporary reduction in wine alcohol duty bands also ends.
What is the purpose of the new duty tax bands?
Significant changes to the alcohol duty legislation will be made in August 2023. Standardised tax bands will be introduced for all types of alcoholic beverages. These bands are determined by the amount of pure alcohol contained in the drink, starting at 0.1% ABV and going up.
The reform was intended to simplify the system by reducing the number of tax bands for products that are not draught from 15 to 8 . In practice, however, the calculation and application of duty are more complicated. Each 0.1% ABV increment in a tax bracket results in different duty charges. A 75-wine bottle with 11% ABV will incur a different duty than one at 11.1%.
A temporary easement was granted to ease the transition. Wines between 11.5% ABV and 14.5% ABV were assumed to have a standardised ABV of 12.5% ABV when calculating duty. This easement will be discontinued on February 1, 2025.
As of this date:
- The tax rate for wines between 11.5% and 14.5% ABV will be 30 per cent, based on the strength of their wine.
- Duty rates will rise by 3.65% RPI, as forecasted.
What Does This Mean for You?
Alcohol duty will increase again on February 1. This will have a number of impacts, including:
- The average price of sparkling and still wines has increased by PS0.15 per bottle.
- All alcohol categories will be subject to a broader adjustment based on new rates.
This announcement coincides with the release of the wine and spirit industry’s annual price lists.
What are Your Options?
You could:
- Update your prices: From February 1, apply the duty increase to wine lists and retail prices.
- Stock up before January 31 2025. This will delay the effect of price increases. In March, review your menus and pricing.
- You can adjust your selection: Include more low-alcohol beers, wines, and spirits. Please view our selection of budget-busting wine here (we will be running a separate blog on the wines you mentioned).
What Can We Do to Help You?
We are here to help you navigate these changes. Your Account Manager will provide tailored advice to suit your business so that you are prepared and experience minimal disruption.
We’re also working with our suppliers on exploring opportunities for lower-ABV wine and other innovative solutions that will help you create more value before February 2025. Watch out for updates.
Contact your Account Manager if you have any concerns or questions. We are here to assist you at every stage.
