Britain’s Brexit wine duty regime is ‘unworkable’, industry warns

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Prime minister Rishi Sunak’s plan to introduce a highly complex tax regime for UK wine importers is going to drive up prices, reduce consumer choice and tie up small businesses in red tape, the industry has warned.

From February 2025 the duty on wine will increase by increments of 2 pence for every 0.1 per cent increase in alcohol content, a system that industry leaders have declared “unworkable”, particularly for smaller importers.

Sunak announced the changes in the 2021 spending review, when he was chancellor of the exchequer, calling them a benefit of Brexit and promising they would lead to a system that was “simpler, fairer, and healthier”. 

However, the plans have sparked a furious backlash from the UK wine industry which supports more than 400,000 jobs and contributes £72bn in economic activity, according to the Wine and Spirit Trade Association.

Matthew Hennings, whose small family business Hennings Wine in Sussex imports about 500,000 bottles a year and employs 22 people, said the new regime would be “incredibly burdensome” for his business.

“We’re going from having two or three duty bands to more than 30,” he said. “I’ll have to hire another full-time member of staff to keep up with the paperwork, and even then it will be a struggle.”

Hennings added the rules would also make pricing wines a matter of guesswork, since the amount of alcohol in each bottle differed from year to year, depending on the weather, and sometimes within the space of a year.

“For table wines that are stored in tanks for freshness and then bottled to order, the alcohol content might fluctuate, say, from 11.2 per cent to 11.8 per cent over a single year, which will make pricing incredibly difficult and unstable for the restaurant trade,” he said.

The changes were first introduced in August 2023 but with an “easement” which meant that all wines between 11.5 per cent and 14.5 per cent alcohol by volume attracted a flat tax of £2.67 a bottle. This covered 85 per cent of the 1.2bn bottles sold in the UK last year. The easement will end on February 1 next year.

The government has resisted intense lobbying by the WSTA and industry players, including Majestic Wine and The Wine Society, to retain the easement to avoid piling bureaucracy on to the industry.

The new regime has attracted cross-party criticism, including from leading Conservatives. Priti Patel, the former home secretary, said at a Westminster Hall debate in March that the changes were “increasing red tape at a time when the government should be doing much more to reduce it”.

Miles Beale, the chief executive of the WSTA, called the rules “ludicrous” and warned that they would lead to “substantial” price increases, with the strongest 14.5 per cent ABV wines seeing duty increases of more than 40p a bottle.

John Colley, the chief executive of Majestic Wine, said ministers’ claims that the new system was “simpler” were wrong. “That is simply not the case — in fact, the system in place pre-Brexit was much simpler to administer,” he said following the Westminster Hall debate on March 7.

Steve Finlan, the chief executive of The Wine Society, which estimated it would need to spend more than £400,000 upgrading its systems to accommodate the changes, said the decision to press ahead with the reforms was “completely out of touch with business reality”.

Kim Wilson, the founder of North South Wines in Bicester, Oxfordshire which imports about 15mn bottles a year and serves most of the big supermarket brands, said the switch to 0.1 per cent duty bands was “one hundred per cent not manageable”.

She added that from vintage to vintage wine, alcohol content could vary by as much as 0.5 per cent, depending on the weather and the fermentation process, requiring a new label and barcode for each one, which will increase bureaucracy.

“It will need one full-time person managing ABV and two part-time staff on logistics — that’s 8 per cent of my workforce dealing with ABVs, not to mention the day to day distraction when we should be focusing on growing the business — it’s frankly stupid,” she said.

The Treasury said that alcohol duty had been frozen for another six months to February 1 during the recent budget, which meant that it was 10p lower than if the planned increase had gone ahead.

A spokesperson added: “We engaged closely with the wine industry throughout the consultation for historical reforms to alcohol duty.”