Tax hikes of up to 20 per cent will be slapped on alcoholic drinks from Tuesday, under a plan established by Rishi Sunak and Jeremy Hunt.
The prime minister and chancellor have agreed to tax alcohol based on its strength - which has led to spirits and wine manufacturing groups complaining they have been unfairly hit.
The overhaul coincides with Brexit and also Mr Hunt’s announcement that the freeze to alcohol duty would end on August 1. It will increase by inflation at 10.1 per cent.
But there is some good news as the chancellor is cutting the duty charged on draught pints across the UK by 11p in August in a major boost for pubs and draught beer drinkers.
Here is a list of drinks that could all soon come with a larger price tag. Except where noted, example costs were taken from Sainsbury’s for the sake of consistency. Sainsbury’s has not said if it will literally be applying the price increases, but the below is intended to be a guide as to the kind of increase that could be applied to drinks on the market in general. All prices were for the non-Nectar card price.
Bottle of wine
Increase: Duty rise by 44p on a bottle of wine
Example: Barefoot Pinot Grigio White Wine 75cl is currently £8 at Sainsbury’s but would be £8.44 if the duty rise was directly added on.
When combined with VAT, it will mean consumers will pay an extra 53p per bottle of wine, according to the Wine and Spirit Trade Association (WSTA).
Cream sherry
Increase: Duty on 18 per cent cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle.
Example: Harvey’s Bristol Cream Sherry 1L at Sainsbury’s is currently £13 but could be £14 if the £1 increase was directly added on.
Prime minister Rishi Sunak— (PA)
Port
Increase: Duty and VAT will add £1.50 to the price.
Example: Cockburn’s Special Reserve Port 1L is £16 at Sainsbury’s but if applied, the £1.50 increase would send it to £17.50.
Gin
Increase: Duty and VAT will add 90p to the price.
Example: Bombay Sapphire Gin 1L is currently £28.50 at Sainsbury’s and could go up to £29.40 if the price is literally applied.
Vodka
Increase: Duty and VAT will add 90p to the price.
Example: Smirnoff Red Label Vodka 1L is £22.50 at Sainsbury’s and the extra 90p could see it rise to £23.40.
Wine and Spirit Trade Association chief Miles Beale said: “We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation, especially for food and drink, and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won’t be able to stay afloat, with SMEs most at risk.
“Amongst all this pressure the government has chosen to impose more inflationary misery on consumers on August 1, with the biggest single alcohol duty increase in almost 50 years.
“Ultimately, the government’s new duty regime discriminates against premium spirits and wine more than other products.”
Jeremy Hunt has lowered the duty charged to pints pulled— (PA)
Draught pints (in pubs or restaurants)
The duty charged is being cut by 11p in August
The British Beer & Pub Association recently found that on average a pint will set you back £4.07 in the UK - and £4.84 in London. But this could be £3.98 and £4.75 respectively.
Packaged beer (bottles and cans)
Increase: 10.1 per cent
Example: Peroni Nastro Azzurro Beer Lager Bottle (620ml) is currently £2.40 at Sainsbury’s but could be up to £2.64 if the percentage is added on.
The BBPA said the tax increase on packaged beer will add an extra £225 million of costs per year across the industry.
Scotch Whisky Association director of strategy Graeme Littlejohn said: “The 10.1 per cent duty increase is a hammer blow for distillers and consumers.
“At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch Whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.”
