HMRC new Excise rates come in on August 1st. A Bat and Bottle view on the new system

What's up doc (1 August changes to UK alcohol taxes)

OK, so currently the average price of a bottle of wine in the UK is £6.35*.
Out of that figure UK Gov takes £3.50, that's 55.1%, leaving £2.85 to buy 1-1.4kg of grapes, process them, bottle, label and ship, warehouse and sell and find a profit. 

In the independent trade we average about £15.70 a bottle, which gives UK Gov £5.37, that is 34.2%, leaving us £10.33 to buy the wine and make some profit, which is a much better place to be. 
To compare: we pay 20% VAT and £2.23 excise (alcohol tax) in the UK, Italy pay 22% VAT and 0.00 excise.

UK Gov has come up with a genius, simplifying wheeze for excise that is almost ready to roll out on the 1 August. (I say almost, because HMRC have not actually yet released the system for us to clear our duty as authorised - Emma is pulling her hair out, as are many others according to the poor lady on the excise processing team at HMRC who has not received any information either).

What few are aware of is that currently there are 7 HMRC categories of wine, 2 of which are most commonly used; all of the wines in each category are taxed at the fixed category rate**.

On the 1 August there will be just 4 categories. 
Why there couldn't be just 1 category for all types of drink with alcohol is totally beyond me.

Anyway, each category applicable to wine will still have its own alcohol related rate of tax***:
£9.27 (wines with alcohol less than 3.5%) for a litre of alcohol
£24.77 (wines with alcohol 3.5% up to 8.4%) for a litre of alcohol
£28.50 (wines with alcohol 8.5% up to 22%) for a litre of alcohol
£31.64 (wines with alcohol exceeding 22.5%) for a litre of alcohol.

All we have to do from August, is to now calculate EVERY, single, different wine's excise tax, by multiplying the wine's ABV% by the appropriate category rate.

So far, so good (because we REALLY LOVE administration, and cross-checking documents for every one of the wines we import is a huge contributing factor to job satisfaction****):  a 15%ABV bottle of wine has 0.1125 litres of alcohol in it, and will be in the £28.50 category, so the alcohol tax will be £3.20 on a bottle.

If we build this into the nation's favourite - the £6.35 Malbec (15%ABV):
The UK Gov will be after:  £1.06 VAT plus the £3.20 excise, total HMRC tax-take will be £4.26. 
That is 67% of the price of the bottle, and I do wonder how much of that our diabetes and liver-saving NHS will see?****

In a move to make this all more palatable, there is an interim period where all wines between 11.5%-14.5% will all kindly be treated as if they were 12.5% wine, ie taxed at £2.67.
So for many wines, for 18 months, excise will be charged at £2.67 per bottle ... which looks just a bit like a reduced and inflated version of the current rule, where 8.5%-15% wine is treated with a single £2.23 per bottle excise tax. Emma is certainly struggling to show any gratitude.

So, who are the winners?

Anyone who makes wine at 3.5% or under, boom time.
Sparkling wine of 11.5% -14.5% is dropping from £2.86 to £2.67.  cin cin!
The biggest winner is 11% sparkling wine, which will be £2.35, down £0.51. ...make space in your fridge!

Who are the losers

Everything else....  especially port, now £2.98,  will be taxed at £4.28 a bottle (at 20%ABV)
and wine is a big loser to the other ferments:
The alcohol tax on a 5.5% bottle of wine will be £1.02
and on the same strength cider, it will be 40p.
It looks like beer will be 87p, surely a mistake there?
... so, if you are in it for the alc%, cider is the one to binge on - get a seat near the loo.

The impending numbers***

  • Duty on all alcoholic products less than 3.5% alcohol by volume: £9.27 per litre of alcohol in the product.
  • Duty on still cider at least 3.5% - less than 8.5%: £9.67 per litre of alcohol in the product.
  • Duty on sparkling cider at least 3.5% but not exceeding 5.5%: £9.67 per litre of alcohol in the product.
  • Duty on beer at least 3.5% but less than 8.5%: £21.01 per litre of alcohol in the product.
  • Duty on spirits, wine and other fermented products at least 3.5% but less than 8.5%: £24.77 per litre of alcohol in the product.
  • Duty on sparkling cider exceeding 5.5% but less than 8.5%: £24.77 per litre of alcohol in the product.
  • Duty on all alcoholic products at least 8.5% but not exceeding 22%: £28.50 per litre of alcohol in the product.
  • Duty on all alcoholic products exceeding 22%: £31.64 per litre of alcohol in the product


 Drink <August 2023 from August 2023 Change
11% Sparkling wine 2.86 2.35 -0.51
11.5% Sparkling wine 2.86 2.67 -0.19
14.5% Still wine 2.23 2.67 +0.44
15% Still wine 2.23 3.21 +0.98
15.5% Still wine 2.97 3.31 +0.34


We would love to hear your comments. Especially if you think this is a simplification, perhaps we've missed something!?



* The Wine Merchant Magazine. Issue 125, June 2023



**** Emma's diatribe, she wouldnt let me take it out

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