Chancellor Set to Reform Alcohol Tax

Chancellor Rishi Sunak is set to overhaul the UK’s punitive alcohol tax regime to give English wine producers an advantage over imported wines, as well as possible reductions in beer duty.

The chancellor is said to be preparing to abandon taxes on sparkling wine and bring the tax charged in line with the same rate as still wine, removing an projected 83p off bottles of UK sparkling wines according to reports from The Sunday Times.

It is also expected that duties will be restructured to give English sparkling wine a tax advantage over foreign competitors, now that Britain is no longer regulated by EU laws on equal tax treatment on products from the EU.

Over the past decade, wine drinkers have paid £4.6 billion more in duty than beer drinkers, with duty on rising by 39 per cent compared to just 16 per cent for beer since 2010.

Taxes on kegs of beer also may be reduced in a which will be welcomed by the on-trade who have been closed for months on end during lockdown.

The Institute for Fiscal Studies has long campaigned to replace the current system with a two-tier structure instead of the current 15-band system.

Reviewing alcohol duty to boost UK producers was a commitment made by the Conservatives in their 2019 manifesto, with the party promising: “We will review alcohol duty to ensure that our tax system is supporting British drink producers.”

Sales of English sparkling wine have soared in recent years, with domestically produced bottles growing in popularity year on year, and sales doubling over the last five years, with predictions that at least 20 million bottles could be produced in the UK each year by 2030.