As reported by The Morning Advertiser, Chancellor Philip Hammond announced that wine duty would rise in line with inflation in his Autumn Budget on 29 October, with ‘white ciders’ also to be taxed at a higher rate.
The 3.1% inflationary rise imposed by the Chancellor means that wine businesses and consumers will face increasing costs in the coming year, with research by wine supplier Bibendum finding that the wine tax policy announced at the 2018 Budget means £2.23 of a £5 bottle of wine will be the duty pricing alone.
The increase means that the price of a bottle of wine will increase by 7p with the costs of a sparkling wine and an average priced bottle of fortified wine both rising by 9p – not including VAT.
Based on volumes of wine sales in 2018, UK wine consumers will collectively be hit with an extra £90m bill from today.
Impact of a no-deal Brexit
Wine & Spirit Trade Association (WSTA) chief executive Miles Beale explained the impact of the Chancellor’s Budget pledge could yet be exacerbated by a no-deal Brexit.
“As of today, the duty rate on still wine has increased by 7p to £2.23, and on sparkling by 9p to £2.86,” he explained.
“This is as a result of the Chancellor singling out wine for an unfair duty increase in last October’s Budget.
“This comes at a particularly bad time for the UK wine industry – the threat of a no-deal Brexit is still on the table with the Government continuing to refuse to rule out leaving the EU without a deal on 29 March.
“If this happens and the UK does leave without a deal, tariffs on wine from the EU will apply, meaning wine prices will rise by 20p per bottle for still wine and 37p for sparkling wine.”
Refusal to back the industry
Beale explained the increase in wine duty came at a particularly difficult time for the industry and sees the policy as an example of the Government’s reluctance to back the UK’s wine industry.
“These price rises are a direct result of the Government’s refusal to back the UK’s wine industry, which supports 190,000 UK jobs,” he said. “Its active decision to pass on a punishing duty rise; and the Government’s inability to the UK’s trading relationship with the EU, from where over half our wine is sourced.
“The WSTA has been consistent in calling for support for the wine industry and for politicians to say #NoToNoDeal. These price rises were entirely avoidable and bitterly disappointing.”