Alcohol tax freeze comes as a huge relief to wine and spirit businesses

The Wine and Spirit Trade Association has welcomed the Chancellor’s decision to listen to British business and UK consumers by freezing wine and spirit duty.

The announcement comes after the WSTA called on the Chancellor to support the wine and spirit industry after pandemic pandemonium and the closure of the hospitality sector has left businesses reeling and Brits feeling the squeeze following a spike in the cost of living.

A freeze will allow businesses to “recover, save jobs and - in time – replenish revenues to the Treasury” and will keep prices down for cash-strapped consumers.

The decision by Rishi Sunak MP to freeze alcohol duty – the longest freeze in 25 years - could not have come at a better time for the UK wine and spirit industry, which not only has to deal with the chaos created by Covid-19 but is also navigating driver shortages and severe supply chain issues.

The freeze is a vital lifeline which will help our talented SME British distillers and English wine makers to invest and grow, as well as help save jobs in the UK’s huge wine and spirits importing and exporting industry.

Miles Beale Chief Executive of the Wine & Spirit Trade Association, said: “The decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain - and consumers, giving everyone a much-needed break to help them recover from the pandemic.

The Chancellor should be commended for listening to our calls for support and understanding that punishing tax hikes are not the best way to reinvigorate the sector. By offering continued respite to the UK wine and spirit sector his actions will help save jobs and - in time – replenish revenues to the Treasury through growth in our potential-filled sector.

We welcome the reduction of the sparkling wine super tax, which is long overdue. However, while simpler the proposals for the overhaul of a new alcohol taxation system does not make the regime fairer, which was a fundamental aim of the review. We are mystified by a proposal that embeds unfairness between products meaning that beer will be taxed between 8p -19p per unit, wine increases to 26p per unit and spirits remains at 29p per unit.”

There will now be a consultation on the Chancellor’s proposal for a complete overhaul of the UK’s alcohol taxation system, setting out 6 new steps to simplify the regime. The Consultation will close on January 30th 2022 - https://assets.publishing.service.gov.uk/government/upload

HMRC figures show the number of distilleries registered in 2020 shot up to over 560 as the UK boosted its distillery numbers by a record breaking 124 last year, doubling the number of UK distilleries in four years.

Despite the pandemic bold investors have decided to back British business and await the re-opening of the hospitality sector to achieve their full potential. The UK spirit industry is worth around £11 billion in economic activity and supports some 230,000 jobs.

The UK wine industry brings in around £11 billion to the UK economy and supports some 130,000 jobs. As well as the UK being the home of some of the world’s biggest bottling plants it also has a thriving English and Welsh wine industry which now boasts 763 vineyards in the UK and 164 wineries. This rapidly growing industry also represents a changing UK agricultural sector and one that offers high quality rural jobs that boost local economies, as well as supporting biodiversity and sustainability.

The measures taken by the Chancellor today, the longest freeze in 25 years, means that UK wine and spirit businesses won’t be hit with over £430 million in extra duty payments during this difficult time.