Daily Newsletter

24 September 2024

Daily Newsletter

24 September 2024

WSTA calls for two-year alcohol duty freeze in UK

CEO Miles Beales said any additional increase to duty "will serve only to reduce income to government further at a time it can least afford it".

Fiona Holland September 23 2024

UK trade body The Wine and Spirits Trade Association (WSTA) has asked the government to pause alcohol duty hikes for the next two years.

The representative body said the move is necessary "to help towards plugging the black hole in the public finances", as well as "boost Treasury coffers".

According to the WSTA, alcohol sales have been dwindling since a 10% hike in excise duty was brought into play in 2023.

HMRC duty receipts data released this month showed alcohol duty receipts had dropped by £1.3bn ($1.73bn) between September 2023 and August 2024, which the WSTA said was a result of the alcohol duty increase in August 2023,

Year on year, "the most pronounced decrease" was seen for receipts from spirits, which dropped £757m. Wine receipts were down £238m.

The WSTA argued that if the UK government keeps raising duty rates while sales still drop, it will continue to see duty income decline, as well as VAT income.

Speaking on the group's demand for an alcohol duty freeze, WSTA CEO Miles Beales said: “Last year’s damaging reforms to the alcohol excise duty system... have hit businesses, consumers and the government purse. Prices have risen, sales are down and so is duty income by over £1.3bn.  

"Whilst it’s good news the Chancellor has more financial headroom as HMRC’s overall receipts show a £8.9 billion windfall, this could have been boosted further - by almost £1.5 billion - if the previous government had not increased alcohol duty by double digits."

Beales added that while the government has indicated that "difficult decisions will have to be taken" in the upcoming budget, expected at the end of October, he stressed: "For alcohol duty the decision need not be difficult.

"Increasing duty – which is the government’s inherited policy - will serve only to reduce income to government further at a time it can least afford it.  

"Freezing duty for at least two years and avoiding imposing damaging additional costs and red tape by maintaining the wine easement, will benefit businesses and consumers by driving growth and keeping prices stable while optimising Government income. In short, a freeze won’t cost Government anything, but it will be financially beneficial to the Treasury, British business and consumers.”   

In advance of the national UK budget next month, the WSTA has also asked the government to confirm it is committed to ending duty stamps for spirits beverages. This was confirmed by the previous government, "but yet to be enacted".

Additionally, it has called for a temporary easement for wine taxes to be made permanent, a demand it has pushed for since the general election in July.

In August 2023, the UK government brought in an 18-month interim system that saw alcohol taxed incrementally based on strength – with lower taxes on lower-abv alcohol, and higher taxes on higher strengths.

Last year, the WSTA said taxation changes would be felt most by producers of still wine, with 90% of these products facing a tax increase.

This transitional period is due to be replaced by a full tax shake-up 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.

Last month, the Scotch Whisky Association (SWA) also called on the UK government to reduce the tax burden on its members. At the time, it said it believed the excise duty hike had cost the government £2.3bn ($3bn) in interest payments.

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