The UK’s basket of Christmas alcohol is set to cost an all-time high this year, the Wine and Spirit Trade Association (WSTA) has warned.
The warning from the trade body came as it reiterated its call for the government to freeze alcohol duty ahead of next Wednesday’s Budget, as consumers face record high prices over the festive period.
The Chancellor is set to raise alcohol duty by RPI, which is at the current rate of 4.8%.
Currently, for every bottle of average priced spirit (at 40% abv) bought, 73% or £10.37 goes straight to the Treasury on duty plus VAT. For an average priced bottle of still wine 55% or £3.20 goes on duty and VAT.
The WSTA highlighted the duty differential with Spain where their shoppers pay 21% VAT on alcohol, but don’t have to pay any duty on wine, sparkling wine, Champagne, Sherry or cider. The Spanish do pay duty on spirits, but it’s less than half the amount paid by British spirit drinkers.
The WSTA compared a typical festive season shop at a supermarket in the UK with the same or similar brands bought at a Spanish supermarket. The UK shop cost £233.58 compared to just £165 in Spain.
The online shop used in this comparison consisted of five bottles of wine, two bottles of Champagne, two bottles of sparkling wine, three bottles of spirits, two bottles of Port, 24 cans of beer and six bottles of 75cl ciders.
A duty freeze would avoid heaping even higher prices on British consumers as well as putting added pressure on the UK wine and spirit sector, said the WSTA.
‘Comparing the wine and spirit tax regime in the UK to that in Spain puts the UK’s excessively high rate of excise duty firmly in the spotlight,’ said CEO Miles Beale.
‘UK consumers are already bracing themselves for shortages and price hikes this Christmas. The Chancellor can ease the financial pain for everyone who is hoping to make up for all the missed family gatherings and last year’s cancelled Christmas by not raising alcohol duty,’ he said.
Freezing wine and spirit duty would also give British businesses a ‘much-needed break, which will be vital for our sector’s road to recovery’, added Beale.
Separately, reports in the national press has suggested that the premium on sparkling wine duty could be scrapped by the Chancellor in the forthcoming Budget in a move that could bring sparkling wine duty in line with still.
The Chancellor is expected to make the changes as part of an overhaul of the UK’s antiquated tax system, which currently has 15 bands of taxation, including six for wine, according to The Times,
Still wine between 5.5% to 15% abv currently incurs £2.98 of tax per litre, while a litre bottle of sparkling wine between 8.5% and 15% is hit with duty of £3.81. If still and sparkling wine are given duty parity, this could wipe 83p off a bottle of bubbles.
