The UK implemented a new alcohol duty system with effect from 1 August 2023. The incoming system simplifies the current structure, and broadly taxes alcoholic products more the stronger they get. Different rates apply to products between 3.5% abv and 8.4% abv. The new rates also apply to goods sold in or shipped to Northern Ireland, under the agreement negotiated between the UK and EU (the Windsor Framework).

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The VAT treatment of alcoholic products remains unchanged.

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The new regime sets out the rates of duty for all categories of alcoholic products in Schedule 6 of the Spring Finance Bill, which became law in July. The revised rates laid down in the Finance Act 2023 are shown in the table below.

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Category                                                                Alcohol by Volume (ABV)                                 Per Litre of Alcohol (GBP)

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All                                                                               <3.5%                                                                              9.27

Still Cider                                                                     3.5% or more but <8.5%                                              9.67

Sparkling Cider                                                           3.5% or more but not >5.5%                                       9.67

Sparkling Cider                                                         >5.5% but <8.5%                                                          24.77

Beer                                                                              3.5% or more but <8.5%                                           21.01

Spirits, wine and other fermented products **        3.5% or more but <8.5%.                                           24.77

All                                                                                 8.5% or more but not >22%                                      28.50

All                                                                               >22%                                                                             31.64

** Wine between 11.5% and 14.5% will be taxed as if 12.5% ABV from 1-08-23 to 1-02-25.

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The former rates for wines of standard strength are shown below. These rates applied since February 2019.

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Category                                                                          (ABV)                                                 Per Hectolitre of Alcohol (GBP)

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Still Wine                                                                   >5.5% but not >15%                                                297,57

Sparkling Wine                                                         >5.5% but <8.5%                                                      288.10

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The former rates were equal to £2.23 for a 75cl bottle of still wine and £2.86 for a 75cl bottle of sparkling wine (e.g. champagne, cava, prosecco).

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Since 1 August the rates for sparkling and still wines of any strength are the same.

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The table below shows the excise duty on wines from 1-08-23.

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Category                        (ABV)                        Excise cost per bottle                                   Excise cost per bottle from

                                                                          01-08-23 to 31-01-25                                           01-08-25 (planned)

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Still                                 11.0%                                       2.35                                                                 2.35

Still                                 13.5%                                       2.67                                                                 2.89

Still                                 15.0%                                       3.21                                                                 3.21

Sparkling                       11.0%                                       2.35                                                                 2.35

Sparkling                       13.5%                                       2.67                                                                 2.89

Sparkling                       15.0%                                       3.21                                                                 3.21

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Sharp-eyed readers will spot that the excise cost for sparkling wines has fallen significantly, while the excise cost for still wines has risen (and then will rise even further for most standard wines in 2025). Sparkling wines of standard strength will essentially return to being taxed at a similar rate to pre 1 August, only after January 2025. As sparkling wines are typically a little lower in alcohol, the move to excise duty aligned more closely to strength tends also to benefit sparkling wines.

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