Windfall for UK treasury after freeze on wine and spirits duty results in greater revenues
The UK treasury has received a £67 million boost to its coffers in only four months, thanks to the freeze on alcohol duty in last November’s budget.
Income from duty paid on wine and spirits has increased by 2% from £3.22bn in the four months from December to April, compared to the same period last year to £3.291 billion.
Revenue from wine and spirits duty continues to hit new highs, with the Treasury set to receive a forecasted £7.7 billion for the financial year 2017/18, up £140 million on the previous year.
It was expected that duty would be raised at the November budget, but a successful campaign spearheaded by the The Wine and Spirits Association and the Scotch Whisky Association urged the government to freeze any proposed duty increases. The freeze in duty meant savings of 8p per bottle of wine, 11p on sparkling wine and 31p on an average priced bottle of spirits for consumers, and is only the second time in 15 years that duty on wine has been frozen.
Of the additional £86m received by the Treasury, £67 million came from wine and spirit sales alone, meaning that the wine and spirit industry accounted for 78% of the increase. Wine collections have so far increased £33m (+2%) and spirit collections increased £34m (+2%).
Wine remains top of the revenue collections table, totalling 37% of duty collections but accounting for only 18% of sales by volume. It is only the second time in 15 years that wine duty has been frozen.
“We have always said a freeze to alcohol duty is a win/win for both the Treasury, the wine and spirit trade and consumer,” said the WSTA’s chief executive Miles Beale. “We hope the latest windfall to Treasury coffers coming from the Budget freeze encourages the Chancellor to continue to stay in touch with what consumers want and support an industry which is proving to be a real asset to British business by rebalancing the UK’s excessive duty rates in this year’s Budget.”
Following Brexit’s impact on the pound, and rising inflation, the UKK’s wine and spirit trade have faced a tough trading landscape.
HMRC alcohol tax revenue
£ million | 2016/2017 |
2017/2018 (Projected) |
% Change |
WINE
|
4,169 | 4,256 | 2% |
SPRIITS
|
3,378 | 3,431 | 2% |
BEER
|
3,320 | 3,460 | 4% |
CIDER
|
288 | 294 | 2% |
TOTAL
|
11,155 | 11,442 | 3% |
Source: WSTA