New post-Brexit tax on wine set to hit businesses with red tape and increase prices, trade organisation warns

A new post-Brexit tax on wine will push up prices for consumers and hit businesses with additional red tape, the government has been warned.

The Wine and Spirit Trade Association says plans to tax alcoholic drinks by alcohol strength as opposed to type have been described by its members as “un-administrable” and “sheer lunacy”. 

While WSTA chief executive Miles Beale said: “Consumers need to recognise that price increases exclusively for the UK’s most popular alcoholic drink are baked in, are going to be substantial and are being imposed by this Sunak government.”

The proposals, first announced when Rishi Sunak was Chancellor following Brexit, would see the amount of duty paid rise by 2p per 0.1% increase in ABV. Given various varieties of wine all have different alcohol volumes, these tax changes could be very complex for producers and distributors. The government initially put in place an 18-month easing in period, whereby all wines with 11.5% to 14.5% ABV would pay the 12.5% duty rate.

The wine industry has been lobbying the government to keep this simplified system in place, however earlier this month Treasury minister Gareth Davies revealed that the duty changes would come into force on 1 February 2025. 

He said: “I recognise completely that a shake-up of a system that has existed for more than 140 years will raise some eyebrows and cause change for a number of businesses, but we should be confident that the bureaucratic burden under the new system is manageable.”

However, WSTA members disagreed, with Beale explaining: “We have since held a series of crisis meetings with WSTA members to try and quantify what the damage is likely to be. The changes to taxing wine have been described as ‘un-administrable” and “sheer lunacy’ by our members. 

“As frustrated wine retailers continue to contemplate how it would be possible to cope with the new taxation system, they have made it very clear that the cost is set to be a multi-million pound kick in the grapes.”

Beale hit out at the government for creating more red tape, something which Leave campaigners promised would be reduced due to Brexit. Jacob Rees-Mogg famously predicted that leaving the EU would cut the cost of food and drink “significantly”. Yet it now appears that another post-Brexit hangover is the cost of wine increasing.

Beale said: “Cutting red tape should surely be a priority for the Tories, who often cite it as a ‘Brexit benefit’. We are not asking for further reform, we are merely calling on the Government to retain the existing, simplified procedure for taxing wine to avoid what is going to be a very costly mistake.

“The recently announced duty freeze – which this Government likes to announce twice a year now – was a relief, but doesn’t mean wine duties will stay the same for another year. Far from it!”

Beale believes that the changes will push the price of 75% of red wines up, due to their higher alcohol content. While further analysis from the WSTA estimates that 43% of wines will go up in price.

He said the changes “would be much more than a one-off cost and that it would push up prices for hard pressed consumers – with negligible or no revenue benefit for the Exchequer”. 

The administrative costs will be particularly onerous on independent businesses. Cambridge Wine Merchants co-founder Hal Wilson told the Guardian that staff would have to check and record the alcohol content of 90% of its stock. He claimed it would lead to a seven-fold increase in workload, which could be “unviable” for the business.

 the new rules would require checking and recording the alcohol content of nearly 90% of the bottles it bought. This would lead to a seven-fold increase in workload for staff, something that would be “unviable” for the business, he said.

A Treasury spokesperson said: “We engaged closely with the wine industry throughout the consultation for historical reforms to alcohol duty. The industry has benefitted from freezes at six out of the last 12 fiscal events."

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday morning.