Alcohol tax to rise in ‘radical’ reform to make system ‘simpler’ - how much wine, beer & spirits will go up

A new ‘radical’ alcohol duty system will go into place from today (August 1) to tax all alcoholic drinks based on their alcohol volume. The new system aims to make taxing drinks simpler, and will replace the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.

The change which is set to go into place on August 1 will be the first reform of the Alcohol Duty system for 140 years. According to the government, the new system will be ‘fairer and responsive’ to new products entering the market as consumer tastes evolve.

The increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA). Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port will go up by more than £1.50.

However, Prime Minister Rishi Sunak has insisted businesses and consumers will benefit from alcohol duty changes despite tax increases affecting some types of drink. The new system was first set out by then-chancellor Rishi Sunak in 2021 and it was said to encourage drinkers to cut back by taxing all alcohol based on its strength, rather than the previous categories of wine, beer, spirits, and ciders.

Mr Sunak described the overhaul as “the most radical simplification of alcohol duties for over 140 years”, enabled by Britain’s exit from the EU. The Prime Minister said: “I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.

“Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.

“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.”

In March’s Budget, Chancellor Jeremy Hunt also announced that the freeze to alcohol duty would end on August 1 and increase by inflation, at 10.1%.

Hunt is also cutting the duty charged on draught pints across the UK by 11p this month in a major boost for pubs and draught beer drinkers, which Mr Sunak hailed as beneficial to “thousands of businesses across the country”.

However, the British Beer and Pub Association (BBPA) said brewers will pay 10.1% more tax on bottles and cans of beer from today (August 1), meaning tax will make up around 30% of the cost of a 500ml bottle.

Despite the draught freeze, the BBPA said the tax increase on packaged beer will add an extra £225 million of costs per year across the industry.

Scotch Whisky Association director of strategy Graeme Littlejohn said: “The 10.1% duty increase is a hammer blow for distillers and consumers.

“At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch Whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.”

“In a further blow, distillers will now face a further competitive disadvantage in pubs, restaurants and bars by being unfairly excluded from tax breaks available to beer and cider.

The Chancellor said the Government was doing “all we can” to help Britain’s pubs as they face rising costs and said the change taking effect on Tuesday “catapults us into the 21st century”.

Alcohol Duty reform - how much drink prices will go up

The increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).

Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port will go up by more than £1.50.

The total tax on a bottle of gin or vodka will go up by around 90p.