Price of a bottle of wine set to rise 45p in Budget alcohol tax rise

The price of a bottle of wine will rise by around 45p as the result of alcohol duties rising with inflation, Chancellor Jeremy Hunt is expected to announce in Wednesday’s Budget.

A new system for alcohol duty first announced by Rishi Sunak in 2021 is also anticipated to come into effect, meaning that alcoholic drinks will be taxed on the basis of their strength, it has been reported.

The combined measures mean roughly 90% of all still wines in the UK will be subject to a tax increase this summer, according to industry estimates.

However, the exact duty levied on each drink will not be announced until Wednesday’s Budget.

Miles Beale of the Wine and Spirit Trade Association (WSTA) commented:

“The WSTA has one main ask of ahead of the spring Budget – no changes to proposed duty rates when the UK’s new alcohol taxation system goes live on 1 August.

“We have also asked the Chancellor, Jeremy Hunt, to introduce an easement period for fortified wines – similar to that given to still wine and for the same reasons.

“This will reduce – though not remove – the cost of introducing the new regime for retailers, especially SMEs (small and medium sized enterprises) for whom the additional red tape is going to hurt.”

The WSTA has said that duty increase on wine will be the biggest for more than 50 years.

It is reported that the Treasury will use a recent figure of 10% from the Retail Price Index (RPI) for inflation as a basis for the duty increase on all alcoholic drinks, despite current cost-of-living pressures.

Wine, therefore, is likely to be among alcoholic drinks hit by a duo of duty increases, through the 10% rise in line with inflation and a further tax on higher ABV drinks. The WSTA estimates wine will be taxed around 44p more per bottle from August.

Analysis puts increases of £1.29 on a bottle of Port and 97p on a bottle of Sherry.

Chancellor Jeremy Hunt will deliver the Spring Budget statement to the House of Commons on Wednesday.