UK Alcohol Duty changes for wines

Top tax tip - Stock up now on still wines but wait until 1 August to buy fizz

The UK Government will implement a new alcohol duty system from 1 August 2023. The incoming system simplifies the current structure, and broadly taxes alcoholic products more the stronger they get. Different rates are going to apply to products between 3.5% abv and 8.4% abv. The new rates will also apply to goods sold in or shipped to Northern Ireland, under the agreement negotiated between the UK and EU (the Windsor Framework).

The VAT treatment of alcoholic products will remain unchanged.

The new regime sets out the rates of duty for all categories of alcoholic products in Schedule 6 of the Spring Finance Bill, which is set to become law in July. The revised rates laid down in the Finance Bill are shown below.

• Spirits, wine and other fermented products - 3.5% or more to less than 8.5% ABV £24.77 per litre of alcohol

• All 8.5% or more but not exceeding 22% ABV £28.50 per litre of alcohol

** Wine between 11.5% and 14.5% will be taxed as if 12.5% ABV from 1-08-23 to 1-02-25.

The current rates for wines of standard strength are shown below. This rates have applied since February 2019.

• Still Wine >5.5% but not >15% - £297.57 per hectolitre of alcohol

• Sparkling Wine >5.5% but <8.5% £288.10 per hectolitre of alcohol

The current rates are equal to £2.23 for a 75cl bottle of still wine and £2.86 for a 75cl bottle of sparkling wine (e.g. champagne, cava, prosecco).

From 1 August the rates for sparkling and still wines of any strength will be the same.

Excise duty on wines from 1-08-23.

 Still - 11% - 1/8/23-31/1/25 - £2.35 per bottle; 1/8/25 - £2.35 per bottle

Still - 13.5% - 1/8/23-31/1/25 - £2.67 per bottle; 1/8/25 - £2.89 per bottle

Still - 15% - 1/8/23-31/1/25 - £3.21 per bottle; 1/8/25 - £3.21 per bottle

Sparkling - 11% - 1/8/23-31/1/25 - £2.35 per bottle; 1/8/25 - £2.35 per bottle

Sparkling - 13.5% - 1/8/23-31/1/25 - £2.67 per bottle; 1/8/25 - £2.89 per bottle

Sparkling - 15% - 1/8/23-31/1/25 - £3.21 per bottle; 1/8/25 - £3.21 per bottle

Sharp-eyed readers will spot that the excise cost for sparkling wines will fall significantly, while the excise cost for still wines will rise (and then rise even further for most standard wines in 2025). Sparkling wines of standard strength will essentially return to being taxed at a similar rate to now, only after January 2025. As sparkling wines are typically a little lower in alcohol, the move to excise duty aligned more closely to strength tends also to benefit sparkling wines.