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

The latest UK Budget has brought some limited good news for wine drinkers after chancellor Rishi Sunak froze duty, but how much tax are you paying, and does it change depending on what you spend?

Every year we hear a raft of stories about tax on wine, as well as beer and spirits, as the UK chancellor unveils the latest plan to juggle the nation’s in-comings and out-goings.

There’s not been a lot of good news for wine lovers in the past decade, as successive governments have raised duty tax, at least in-line with inflation.

Wine duty has risen by 12% on wine since 2014, more than for beer or spirits, according to campaign group Wine Drinkers UK.

However, new chancellor Rishi Sunak this week announced a duty freeze on wine, spirits, cider and beer, meaning that tax won’t rise with inflation.

While that is potentially good news, 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.

For example, the Bibendum graphic above shows that a bottle of wine costing £7.50 or £10 should mean that a higher proportion of the money is going into the winemaking, versus a bottle of wine at the £5 mark.

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

See also: Wine buyer’s guide to Calais – Is a ‘booze cruise’ still worth it?

Yet, there is a broad logic to the argument.

If one only looks at duty and VAT – sales tax – the graphic above shows that more than 50% of the money spent on a £5 bottle of wine goes straight to the government’s coffers.

That falls to around 46% for a £7.50 bottle of wine, 39% for a £10 bottle and nearly 28% for a £20 wine.

VAT vs Duty

VAT rises proportionately with the price of the bottle, but duty is charged on alcoholic strength in the UK.

A still wine at more than 5.5% abv and up to 15% abv will have the same duty rate regardless of whether it costs £5 or £500.

The government actually quotes rates per litre, but the Bibendum graphic above is calibrated for a single 75cl bottle.

For sparkling wine, there is a slightly lower rate of duty for wines between 5.5% and 8.5%.

However, the rate for sparkling wines above 8.5%abv and up to 15%abv is higher than for still wines with a similar alcoholic strength.

The UK is known to have some of the highest alcohol duty rates in Europe, alongside Scandinavian countries.

It will be interesting to see if tax on wine changes in the next few years, given the rise of the domestic English wine industry.

See more wine questions answered:

What is a Bordeaux blend?

What makes a wine vegan?

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