Yesterday I secured a debate in Westminster Hall on wine excise duty after Majestic (who have a large branch in Colchester) contacted me raising their concerns.
The debate related to the new alcohol excise system introduced last year. The new system, introduced on 1 August 2023, levies excise duty on all alcoholic products according to strength but at different rates.
In introducing the new system, the Government recognised the impact this would have on wine businesses and put in place a temporary easement mechanism which pegged the amount payable for wines in the range 11.5%-14.5% at the amount payable on a wine at 12.5% abv - currently £2.67 per bottle. Wines falling within this easement mechanism account for 85% of the wine on the UK market – that’s 1.1billion bottles out of 1.3 billion bottles.
The easement is set to end on 1 February 2025 and wine businesses from the major multiple retailers to specialists like Majestic down to the thousands of independent merchants have all said that having to implement fully the strength-based system would impose significant costs running to many millions of pounds – both in the short term and once the necessary systems are established.
The easement recognises that wine is different to other categories of alcoholic drink. Wine cannot be made to a pre-determined strength. Alcoholic strength of a wine is determined by climate (wines from warmer climates tend to be higher in alcohol than wines from cooler climates).
Wine has far more stock keeping units (or SKUs) than other alcohol categories estimated to be in excess of 100,000 wine SKUs on the UK market. Specialist SME retailers will carry more than 2,000 SKUs while larger wine retailers may carry up to 10,000. If the easement ends, duty will have to be calculated individually for each SKU and annually, as alcoholic strength can vary between vintages.
The abolition of the easement on 1 Feb 2025 would introduce massive – and ongoing - red tape costs, which concern supermarkets and large specialist retailers, but which would be disproportionately costly for smaller wine businesses.
I asked the Treasury Minister to make the easement permanent. It’s a simple fix that would benefit business, consumers and make very little difference to Treasury receipts.
You can watch the 30 minute debate here
https://parliamentlive.tv/event/index/4abdd3b2-2ebc-4059-b498-798f00f4a1f1?in=16:00:13