Wine import taxes in the United Kingdom (are very different from the USA)

 As I noted in a recent week’s list of quotes (Quotes from famous people about wine and its role in our lives): “Wine makes every meal an occasion, every table more elegant, every day more civilized.” — André Simon. It also makes it more expensive, due to government taxes.

New U.S. president Donald Trump made a central part of his ‘Make America Great Again’ campaign the tenet of imposing a minimum tariff on all imports (Drinks firms brace as Trump elected US president). He has made it one of his first actions to affirm the new taxes on trade, including a 10—20 % tariff on all imports (How will Trump’s universal and China tariffs impact the economy?).

So, as a change from the current U.S. news, let us look at United Kingdom taxes, or duties as they call them (basically, excise duty = import tax; What is the difference between taxes, duties, and tariffs?).

In the U.K., all alcoholic drinks are taxed based on their alcohol by volume (ABV), meaning that beverages with a higher alcoholic percentage are subject to higher rates. This idea came into effect in August 2023 (The new alcohol duty system), as previously there had been four separate taxes, covering beer, cider, spirits, wine and made-wine.

Note that the U.K. duty is a fixed cost, based on ABV, irrespective of the cost of the wine itself (cheap or expensive) — this is a very different thing from the U.S. import duties, which are a percentage of the cost of the wine (and are likely to stay that way: Four more years ... of a non-wine drinker in the White House).

The British system for wine looks roughly like this (£1 = US$1.22):
 ABV    Excise duty per 750 ml
    1%    £0
    2%    £0.14
    3%    £0.21
    4%    £0.74
    5%    £0.93
    6%    £1.12
    7%    £1.30
    8%    £1.49
    9%    £1.92
  10%    £2.14
  11%    £2.35
  12%    £2.57
  13%    £2.78
  14%    £2.99
  15%    £3.21

However, this arrangement was too simple, or perhaps too complex, as the government decided that there would be a “temporary arrangement for wine”, up to and including the end of January 2025 (Work out how much Alcohol Duty you need to pay). The idea is that:

If you need to pay duty on wine with an ABV of between 11.5% and 14.5%, there’s a temporary arrangement from 1 August 2023 up to and including 31 January 2025. During these dates you must use an assumed strength of 12.5% when you work out the amount of Alcohol Duty for your wine.

In other words, for 11.5—12.0% alcohol you pay more duty (£2.67) than you might expect, and for 13.0—14.5% you pay less. Go figure!

Anyway, the U.K. government has announced that it will increase tax on wine and spirits in line with inflation from February next year (Autumn budget: British government increases tax on wine and spirits). Wine at <12% may actually decrease in duty, but wine at greater % will increase (anything up to a 20% increase).

It should come as no surprise that taxes increase through time. We can look at the U.K. taxes, as they do not hide the information (Historic alcohol duty rates). I have plotted the data in the above graph, showing the taxes from 1995 through to 2017. It shows that at a minimum the amount of duty paid has pretty much doubled through time (ie. an increase to 200%).

For comparison, based on the Bank of England “Target” (i.e. average) inflation rate of 2% per year (Inflation: UK prices soar at fastest rate for almost ten years), the price of a bottle of wine has gone up to only 150% during the same period of time. So, taxes have increased faster than inflation.

It is therefore no wonder that Nearly half of UK drinkers plan to reduce their alcohol intake over the next year:

New research .... suggests that up to 48% of Britons intend to cut down on alcohol in the coming year. About 9% say they intend to stop drinking altogether. Those who are most likely to cut down are young, with 61% of 18-24 year olds planning to reduce or completely stop. This number increases to 68% for those aged between 25-34. As to why they’re planning to cut down, 34% said they wanted to save money, while an equal number said they wanted to cut down for their health.

My wine life here, as an Australian migrant in Sweden, was much simpler back when the U.K. was part of the European Union (it ended its membership in January 2020), and I thus didn’t have to pay import duty to get Australian wine into Sweden from Britain, which was a good supply source.