Wine retailers issue warning to customers as tax changes loom
Wine sellers like Majestic and Cambridge Wine Merchants are alerting their customers to brace for potential price hikes and shortages on shelves in the coming year. These warnings come ahead of new tax regulations set to take effect from February 2025, which stem from plans introduced by the previous Conservative government. The impending changes will introduce over 30 different duty bands, affecting the duty paid on wines with alcohol by volume (ABV) ranging from 11.5% to 14.5%.
According to the Wine and Spirit Trade Association (WSTA), wines falling within the 11.5% to 14.5% ABV bracket, which make up about 80% of the UK market, will be particularly impacted by these new tax rules. For instance, a bottle of wine with 14.5% ABV would see its duty increase from £2.67 to £3.09 under the new system.
In letters to customers, wine retailers have expressed their powerlessness in shielding consumers from potential price increases. They have highlighted the likelihood of decreased wine quality and variety on the market. There are concerns that some producers may choose to stop exporting their wines to the UK due to the added administrative complexities associated with the new taxation system.
Retailers like Majestic and Cambridge Wine Merchants are urging the newly elected Labour Government to reconsider the previous administration’s plans. They are hopeful that the Chancellor will address these concerns in the upcoming Budget statement at the end of the month. John Colley, the CEO of Majestic, has mentioned collaborating with the WSTA to engage with MPs and advocate for necessary changes to support the industry.
An 18-month transition period known as an “easement” was put in place to assist businesses in adjusting to the new taxation system. However, this temporary arrangement, which taxed wines between 11.5% and 14.5% ABV at a flat rate per bottle, is scheduled to conclude on February 1. Other retailers such as Laithwaites and The Wine Society are also expected to communicate with their customer base regarding these impending changes.
As the industry braces for potential disruptions in the wine market, stakeholders eagerly await clarification from the Treasury regarding the situation.