UK drinkers see VAT rise

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  • Wednesday 5 January 2011

The UK’s wine drinkers have been greeted with mixed news at the start of 2011 – a VAT increase but also an end to a ban on the sale of wine samples in restaurants, bars and pubs.

majestic

Majestic will hold off on VAT till end January

The coalition government implemented the VAT increase – from 17.5% to 20% – yesterday (4 January), part of a series of austerity measures designed to cut the deficit and help the UK economy to recover from the recent downturn.

The increase effectively means a 10p-plus price increase on lower-priced bottles of wine, but a higher increase on more expensive bottles.

In theory, a £4.99 wine costs £5.10 after the increase, but a £9.99 bottle moves up to £10.20 and a £19.99 wine costs as much as £20.40.

However, it is as yet unclear if and when the increases will be passed on to consumers.

Majestic Wine, for example, is holding its prices at pre-VAT increase levels until the end of January.

Further price increases are expected in the 2011 Budget on 23 March, when Chancellor George Osborne is due to raise excise duty by 2% above inflation.

Meanwhile, Science Minister David Willetts has announced an end to the ban on the sale of wine measures of less than 125ml in licensed premises such as pubs and restaurants.

The new rules will allow premises to sell wine in measures of less than 75ml, opening the way for sample measures and wine flights to be sold legally.

In addition, fortified wine will be sold in smaller measures of 50ml and 70ml, while beer can be sold in ‘schooner’ measures of two-thirds of a pint.

‘This is exactly the sort of unnecessary red tape the government wants to remove,’ said Willetts. ‘No pub or restaurant should break the law by selling a customer a sample of wine.’

A Statutory Instrument introducing the changes will be introduced during the impending Parliamentary session.

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