The UK Wine and Spirit Trade Association (WSTA) CEO Miles Beale has said Prime Minister Rishi Sunak had “just made life much more difficult” for the industry during his time in office.
The UK introduced an interim system last year which saw alcohol taxed incrementally based on strength – with lower taxes on lower-abv alcohol, and higher taxes on higher strengths.
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The interim system is due to be replaced by a full tax shake-up in February 2025.
Speaking to Just Drinks at London trade show Imbibe yesterday (3 July), Beale said the system “bears no resemblance to reality”. He said Sunak “hasn’t really done anything particularly new and he’s just made life much more difficult”.
Last year, the WSTA said taxation changes would be felt most keenly by producers of still wine, with 90% of these products facing a tax increase.
It comes as the UK goes to the polls tomorrow (4 July) to vote for its next Prime Minister.
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By GlobalDataThe 18-monht transition period of wine into the new tax regime ends in February 2025. A freeze on alcohol duty increases, introduced in November 2023, also comes to an end on 1 February if no government action is taken.
The WSTA has called for the government’s temporary easement of wine taxes to be made permanent following this week’s election.
Sunak devised the alcohol tax law revisions during his time as the UK’s Chancellor of the Exchequer. “He was looking for a tax that he was able to change, that he couldn’t change while we were a member of the European Union,” Beale said.
Following the overhaul of the tax system last year, the UK government also announced alcohol duty would increase in line with RPI inflation from 1 August, sparking outcry from manufacturers at what they called a “double-pronged tax hike”.
In November, it said it would freeze tax until August 2024 – which it extended until February 2025 in March.
Impact of new tax system on wines
The UK’s new tax system for wine is due to come into place in February 2025, after an 18-month transition period.
The WSTA said if the tax freeze is lifted, from February 2025 a single amount of duty paid on wines of 11.5-14.5% abv – currently £2.67 – will be replaced with “up to 30 different payable amounts” from £2.45 to £3.10 per bottle.
Beale previously said many of the WSTA’s members have called the changes to wine taxes in the UK “un-administrable” and “sheer lunacy”.
It would mean wine producers potentially paying different taxes on each wine each year, if the abv differed between two vintages.
Speaking at Imbibe, Beale said Sunak had, on taxation, “completely missed the point”.
He added: “He’s effectively used our industries to try and make the kind of pro-Brexit point that thoroughly blew up in his face. And he’s left a mess, that’s really the biggest problem, is that he’s left quite a big mess for someone else to deal with.”
DRS
Beale also called on the UK’s future government to have more discussion with trade organisations and beverage industry workers before they introduce changes like the proposed Deposit Return Scheme (DRS) in the UK.
The UK government first announced plans for a DRS back in 2018 with the aim of increasing recycling rates and cutting down on plastic waste.
In April, it was announced the scheme had been further delayed to October 2027 as a single rollout across England, Northern Ireland, Scotland and Wales, nine years after originally promised by then-Environment Secretary Michael Gove.
The WSTA says: “The roll-out of deposit and return schemes across the UK must be interoperable with common fees and labelling requirements and a common set of materials within scope.”
The association believes glass should not be included within scope of any DRS.
Beale said yesterday that: “Glass recycling is already fantastically successful. Believe it or not, Wales is, we think, the third or fourth best country for recycling glass in the world. Why would you introduce a new system that undermines or gets rid of a successful system?”
