Act now to force duty U-turn

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The wine trade has until the end of this month to explain the damage that is widely expected as a result of the Chancellor’s overhaul of the duty system.

The new regime will penalise most types of wine, applying a sliding scale of taxation based on its alcohol content.

The new system is planned to maintain the current duty rate for wine at a strength of 11.5% abv. But for every 0.5% of alcohol above that, duty will increase.

As well as adding to retail prices – a bottle of port would typically see an overnight price increase of £1.09 – the changes are expected to cause supply-chain havoc.

Importers are worried about the vast variation in duty calculations on mixed pallets of wines. They also point out that some wines see fluctuating alcohol levels from vintage to vintage, adding to the admin burden.

Helen Whately

There was indignation in the trade following Rishi Sunak’s budget announcement in October, which gave the impression that the duty system was being simplified and streamlined rather than complicated with a ladder of duty rates for wines between 8.5% and 22% abv.

The new system, due to come into force next year, at least has the redeeming feature that it will no longer discriminate between still and sparkling wines.

Treasury minister Helen Whately maintains the new arrangements will be “simpler to use, fairer to all producers, clearer and more consistent”.

The plans were drawn up following a review of the duty system, which resulted in 106 responses from stakeholders and included roundtables attended by public health groups, trade associations and economists.

The wine trade has until January 30 to respond to the proposals, which must be submitted using a templated form hosted on the HMRC website.

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