2023 WINE DUTY CHANGES IN THE UK & WHAT THEY MEAN If you have been burying your head in the sand recently you may have missed an upcoming important deadline for wine-drinkers – 31st July 2023 – after which, despite much lobbying by the drinks industry and despite the government’s stated desire to control inflation, higher rates of duty will be applied to most still wines. THE 2023 CHANGES IN DUTY ON WINE From 1st August it is estimated that 90% of still wine will see duty rise by at least 9% from its current level of duty – £2.23 per bottle. Duty on a fairly average 13% ABV bottle of wine will increase by 20% to £2.67 and for still wine with 15% ABV the rise in duty will be a whopping 44% to £3.21 per bottle (these rates exclude VAT which applies to the duty charged as well as to the wine itself). Fortified wines like port at 20% ABV will attract a duty increase of £1.30 per bottle to £4.28 and the highest increase of £1.73 will apply to a fortified wine with 22% ABV. This compares with extra duty of 82p on a bottle of 37.5% ABV vodka.   See table below for some examples of increases – and decreases in duty from 1st August:  I have written in the past about the unfairness of taxation on wine compared to other alcoholic beverages so will not reiterate those thoughts in this blogpost apart from to write that when the government has frozen duty rates on alcohol, there is evidence that revenue from wine duty in the UK grows – and, to be fair, duty rates have been frozen since the Autumn Budget of 2020. Conversely wine duty receipts usually fall after an increase in the rate of duty on wine and so it seems strange that the Chancellor has now decided to increase duty at this moment in time – and in this way. WHY THE DUTY CHANGES WILL NOT MAKE THE SYSTEM SIMPLER One of the stated aims of the government’s Alcohol Duty Reforms is to simplify the current system – the broad idea being to tax alcohol depending upon its alcoholic strength which does not seem unreasonable. But, after a number of hours spent calculating the new rates and comparing them to current rates, the system does not feel simpler at all. There is the added complication of some Transition Rates which will apply to all wines between 11.5% and 14.5% ABV until 31st January 2025, after which some rates will increase and some will decrease – although this assumes that the actual rates do not rise in line with inflation which unfortunately is another of the Government’s stated aims. All in all the detail of the system is going be cumbersome for wine businesses to manage – and costly. The Wines & Spirit Trade Association estimate £250m extra costs to the industry to handle the changes. Alcohol levels in wine vary according to the vintage – warmer weather usually means more of the sugar in grapes converts to alcohol – and so the duty rate is expected to change for most wines every year. Every wine retailer therefore needs to be prepared to adjust prices for every wine every year. The increases in duty generally will be hard for customers to stomach especially in the current economic climate, never mind the extra costs of administration that are no doubt going to have an impact on the general cost of wine for the consumer. Currently the system for duty charges can be described fairly succinctly: – £2.23 per bottle for most still wines, certainly all those between 5.6% ABV and 15% – £2.86 per bottle for most sparkling wines, certainly all those between 8.5% and 15% – £2.98 per bottle for all wines between 15.1% and 22% ABV which includes most sherries and port wines Of course there are exceptions to these three bands but they correspond to the vast majority of wines sold in the UK. Under the new regime with alcohol taxed according to its strength and increasing for every 0.1% ABV, there will effectively be many more bands. THE WINES THAT WILL SEE LOWER DUTY RATES The seemingly good news is that there will be decreases in some rates of duty. From 1st August 2023 the following will see a decrease in the rate of duty payable: – any wine between 1.3% ABV and 3.6% ABV – any wine between 4.10% and 5% ABV -any still wine between 5.6% and 10% ABV – any sparkling wine between 5.6% and 14.5% ABV Not exactly easy to follow. Apart from a few quirks in the system (wines between 5.1 and 5.5% ABV seeing higher rates for example), you can see the logic. The government is trying to encourage better health by lowering rates on lower alcohol wines. However, whether intentional or not, they are penalising those who don’t favour sparkling wines and off-dry white wines – as these tend to be lower in alcohol than most other wines. The grapes for sparkling wines tend to be picked before they are fully ripened partly to retain good levels of mouth-watering acidity. Less ripe grapes mean less sugar is available to develop into alcohol during fermentation. For off-dry wines, fermentation is stopped early by removing the yeast so that some sweetness is retained in the wine. THE WINES THAT WILL SEE HIGHER DUTY RATES Although it might initially appear that several bands of wine will see a decrease in duty, the vast majority of wine sold in the UK is between 11.5% and 15% ABV and so most of the wine we are used to purchasing will see an increase. This includes: – any wine between 3.8% and 4% ABV – any wine between 5.1% and 5.5% ABV – any still wine between 10.5% and 14.5% – any wine with 15% or higher ABV As has been alluded to above, grapes for still wines generally tend to be picked at a higher level