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Tax on wine: How much do you pay in the UK? – Ask Decanter

We take a look at current rates, why some trade data suggests it could be beneficial to spend slightly more on a bottle, and how the government's planned tax reform may affect wine duty tax.

Tax on wine in the UK could change markedly in 2023 if alcohol duty reform plans announced by chancellor Rishi Sunak get the green light.

For now, Sunak used his autumn 2021 Budget speech to again freeze duty tax on wine and other alcohol under the current system, in a move welcomed by trade bodies.

Wine is enjoying the longest tax freeze in 25 years, although campaign group Wine Drinkers UK says duty tax has risen by 39% since 2010. The country is known for having some of the world’s highest alcohol duty rates.

And duty isn’t the only thing that affects prices. The average cost of a bottle of wine has still risen in the past year, said the Wine & Spirit Trade Association (WSTA) recently.

Duty tax on still wines: Is it better to spend more?

Many in the wine trade have long argued that if you increase your spend on wine – even by a little – then you are in theory getting better value for money in the glass.

Duty tax is equivalent to £2.23 per 75cl bottle on still wines above 5.5% abv and up to 15% abv inclusive, as the Bibendum graphic above shows.

In theory, that means a higher proportion of the cost of a £7.50 or £10 bottle filters back to the winemaking.

Bibendum’s graphic shows more than 50% of the money spent on a £5 bottle of still wine goes straight to the government’s coffers as duty and VAT, but this falls to 39% on a £10 bottle.

It’s not an exact science, because costs like shipping, marketing and retailer profit margins will vary.

Unlike duty, value added tax (VAT) rises in proportion to the wine’s price, so VAT is going to be much higher on that £500 bottle.

UK duty tax on sparkling wine

Sparkling wines, from Sussex to Champagne to the hills of Prosecco country, could enjoy a sizeable duty tax cut under the plans to overhaul the UK’s alcohol duty system. That’s because a lot of sparkling currently carries a premium tax rate.

The current rates, equivalent to 75cl, are:

  • £2.16 for wines above 5.5% abv and up to 8.5% abv.
  • £2.86 between 8.5% abv and 15% abv.

If the government’s plans are confirmed, the WSTA said a 12% abv bottle of sparking wine should see its duty bill fall by 53p, with a total saving of 64p on current tax rates after VAT.

Duty reform: Some wines could see their tax bill rise

Many trade bodies took a cautious approach to duty reform following the chancellor’s autumn Budget speech, in which he outlined a ‘simplified’ system that will work on the basic concept of ‘the stronger the drink, the higher the rate’.

According to the government’s consultation document, wines between 8.5% and 22% abv ‘will be taxed at a single flat rate per litre of pure alcohol’.

Under this model, the WSTA said duty on a 15% abv still wine would rise by 68p per bottle to £2.91.

A 12% abv still wine would see duty increase by 10p to £2.33.

For Port and Sherry lovers out there, fortified wine duty could also go up. A 17% abv fortified wine currently has a duty bill of £2.98 per 75cl bottle, but this would rise to £3.30 under the government’s plans, the WSTA said.

Sources include: Bibendum / Vinomics (graphic), the WSTA and figures in the government’s consultation paper on alcohol duty reform (October 2021). 

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