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.
And in the past decade it’s generally been bad news for wine lovers, with successive tax increases under different governments. So it was with chancellor Philip Hammond this week, who announced duty rises in-line with inflation – currently running at around 2%.
But, what is less commonly reported is 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.
Yet, there is a broad logic to the argument.
If one only looks at duty and VAT – sales tax – the graphic 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 45% for a £7.50 bottles of wine, 38% for a £10 bottles of wine and just over 27% for a £20 wine.
VAT rises proportionately with the price of the bottle, but duty is charged on alcoholic strength in the UK. A still wine with 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 UK’s Wine & Spirit Trade Association (WSTA) said that consumers and businesses paid a collective £4 billion in duty tax and £1.7bn in wine VAT charges in the past year.
Britain is known for 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.
Got a question for Decanter’s experts? Email us: email@example.com or on social media with #askDecanter
More Ask Decanter articles:
Everyone talks about them, but who understands them?...
Is it more expensive to ship wine from further away?
Sometimes the simplest methods are the best...
Does acidity remain constant or can it alter over time? Stephen Skelton MW explains the relationship between acidity and wine
What is the difference between primary and secondary aromas?