The government has announced another inflation-linked increase in alcohol duty, prompting a furious response from the Wine & Spirit Trade Association.
But there was better news for independent wine retailers, with thousands of small shops set to benefit from an increase in the business rates relief threshold.
Chancellor John Healey confirmed in today’s Budget that alcohol duty will increase by 4.55% from February 1, 2027, adding further costs for wine merchants and their customers.
According to the WSTA, the increase will add 14p in duty to a bottle of Prosecco and 18p to a bottle of 14.5% abv red wine. A bottle of gin will attract an additional 49p in duty.
The WSTA described the decision as “breathtaking”, arguing that successive duty increases are damaging sales, squeezing businesses and failing to deliver additional revenue for the Treasury.
Miles Beale, WSTA chief executive, said: “No one will be toasting this record-breaking 4.55% RPI increase on top of rising inflation – most of all British consumers who will be paying for this.
“Instead of providing breathing space in a cost-of-living crisis, the Chancellor’s alcohol tax hikes will further suffocate British business and serve up nothing for consumers.”
The association says wine sales volumes have fallen by 8% since the introduction of the new alcohol duty system in August 2023, while spirits volumes have declined by 15%.
It calculates that, by February next year, duty on a bottle of 14.5% abv red wine will have risen by £1.50, or 56%, since August 2023. The equivalent increases for port and gin will be £2.19 and £2.15 respectively.
Beale urged ministers to “stop the hikes, look at the numbers and listen to those being impacted”, adding that the current approach was closing businesses and pricing consumers out of the market.
There was no announcement of a wider overhaul of the alcohol duty system or a return to the previous duty easement for wine.
But independent wine merchants in England received more encouraging news on business rates.
From April 2027, the rateable value threshold for 100% Small Business Rates Relief will increase from £12,000 to £18,000 for qualifying retail, hospitality and leisure premises. Tapered relief will extend to properties with rateable values of up to £21,000, compared with £15,000 currently.
The change means that many smaller independent wine shops currently paying business rates could see their bills eliminated, provided they meet the qualifying conditions.
The government estimates that around 70,000 additional high street businesses will be taken out of business rates altogether. For other qualifying retail premises, increases in business rates bills will be capped at CPI inflation for two years.
The measures offer some welcome relief for independent wine merchants, even as the latest duty increase threatens to put further pressure on margins and retail prices.
