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New Excise Duty System

New Excise Duty System - Wines of Interest Ipswich

Way back in 2021, when Rishi Sunak was Chancellor, he announced a "simplification" of Excise Duty Rates for alcohol as part of his autumn statement.  You can read the full speech here if you really want to.  Just scroll down to the section called Alcohol Duties.

The Current System

For virtually everything we sell we currently concern ourselves with just 3 Excise Duty rates based on bands of alcohol by volume (abv):

Still wine 5.5% abv to 15% abv
Still wine 15.5% abv to 22% abv (most fortified wines included here)
Sparkling wine 8.5 % abv to 15% abv
Above 22% abv the calculation is done based on precise alcoholic strength.

It's a system that's worked for decades and everyone in our trade is used to it. 

The Proposed Changes

However, Rishi decided that it needed simplification and immediately announced that the separate rate for sparkling wines (including Champagne) would be abolished.  Great idea. Never made sense in the first place unless you're the government who historically have regarded drinkers of fizz as the "wealthy elites" (Rishi's words).

Rishi then made other announcements that led us to realise that he was using the word "simplification" in a way we've not previously been aware of.  He also delighted in announcing that it's only because we have left the EU that he was able to introduce such sweeping reforms to Alcohol Taxation. 

Rather than bore you with more text here we would invite you to watch this clip from an edition of Question Time where an audience member and member of the wine trade took time to explain the effect of Brexit and what's happening with the Excise Duty changes...

The single duty band covering most of the wines we sell (8.5% to 15%) will now become 8 duty bands with the precise alcoholic content of each wine now highly relevant to how much tax it attracts.  The main band that will apply (11.5% abv to 14.5% abv) will see an increase in Excise Duty of 20%.  That's the government pushing through a taxation increase of more than twice the rate of inflation.

The Effect on Prices

The result of all this means that as things stand, starting from 1st August, we are expecting that our retail prices will need to change, as follows:

Still wine 10% abv and under - there will be some modest reductions once new prices filter through depending on precise abv.
Still wine 10.5% abv and 11% abv - no change (we will absorb the small increases)
Still wine 11.5% abv to 14.5% abv - will increase by 75p per bottle
Sparkling wine 11.5% to 14.5% abv - will decrease by 30p per bottle

So, sadly, most prices will eventually need to go up. We will consider each line individually though (as we always do) so precise changes may be less than the above unless there are other increases in costs that need to be factored in.

I'm sure you will appreciate how frustrating it is, having done everything we possibly can to control prices in these difficult times, to have the government apply increases like this - especially as it's being touted as a simplification of the taxation system.  It isn't.  It's just a way to increase taxes.

Rather than bring these changes in all at once we will only implement them when we start paying the higher duty rates ourselves.  Unless, of course, the government has a change of heart and realises that such increases are completely contradictory to their stated aim of controlling inflation.

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