Wine Duty

A couple of weeks ago the Chancellor announced a freeze in the duty payable on wine. But what is Duty on wine?

HM Revenue and Customs state that wine Duty is payable on the production of wine or made-wine of more than 1.2% alcohol by volume (ABV).

Wine is defined as a drink produced by fermentation of fresh grapes or grape must.

Made-wine is any other drink – apart from beer or cider – containing alcohol that is made by fermentation, rather than by distillation or any other process. For example, mead is classed as made-wine.

The amount of Wine Duty payable on wine or made-wine is calculated according to its strength and whether it’s sparkling or still.

So, for example, from 23rd March 2015 the duty on wine or made-wine products with an ABV between 1.2 and 4% would attract duty of £84.21 per hectolitre of product. Whereas, the duty on sparkling wine or made-wine with an ABV between 8.5% and 15% is £350.07 per hectolitre of product. A hectolitre is equal to 100 litres. These rates mean that on some £5 bottles of wine, more than half the cost is made up of tax (duty and VAT).

Last year the ‘escalator’ of predetermined annual increases for alcoholic drinks was scrapped but wine duty still rose with inflation. The freeze this year has been welcomed by the wine industry but according to the ‘Drop the Duty’ campaign, wine has not received a tax cut since 1984. By contrast, duty on spirits and cider were cut by 2% and beer by 1p per pint in the most recent budget. It is also noteworthy, that the UK has the second highest rate of wine duty in the EU, with only Ireland having a higher rate.

However, while not enjoying a cut in duty, the UK’s 30m wine consumers can at least know that they will not pay more duty for a time and at least until well after the general election.

Image is “Freyburg – Weinberg über der Unstrut” by FranzfotoOwn work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

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