The Budget – UK duty on wine

As there was no mention of alcohol duties by the Chancellor of the Exchequer in her Budget speech, this is a doom Thursday briefing rather than a Black Friday sales pitch.

It’s hardly headline news – and barely gets a mention elsewhere – but UK duty on wine is set to rise again by the RPI of 3.66% on 1 February. Now that doesn’t sound a lot – about 9-12p plus VAT on a bottle of wine – but this should be seen in the context of the recent hikes and absurd levels of admin, courtesy of the Conservatives’ new wine duty system and not helped by a new Labour government which endorsed the policy and added further costs.

The level of UK tax on wine can be quite hard to grasp, so here are a few tables and charts which show where we’ve come from and where we’re headed. Plus some tasty bullet points.

Our usual, cheery tone will resurface at the start of December.

All the best

Gavin & Angela Quinney

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‘Uprating’ duty on wine

“The government heard representations from stakeholders ranging from a duty cut or freeze to above inflation increases. This decision balances the important contribution of alcohol producers and the hospitality sector to our culture and economy, with the duty’s role in reducing alcohol harm.”

From the upbeat-sounding ‘Alcohol Duty uprating’ on gov.uk, showing the new rates, published soon after the Budget.

“The Government’s typically disappointing and short-sighted decision to raise alcohol duty yet again will only prolong the economy’s doom loop. But no matter how much evidence we provide showing that tax hikes don’t work for anyone, the Treasury continues to press ahead with its ill-founded plan to pile further duty increases on alcohol.”

From Miles Beale, CEO of The Wine and Spirit Trade Association (WSTA).

Here below are the numbers, using the current UK duty rate of £29.54 per litre of alcohol in any wine of 8.5%-15% abv, going up to £30.62 per litre from 1 February 2026.

Remember that there’s VAT on the wine and the duty. So, for example, a bottle retailing for £9 includes £1.50 VAT and the duty shown above – depending on the level of alcohol as stated on the label.

The new duty system

Prior to 1 August 2023, UK duty on wine between 8.5% and 15% was £2.23 for still wine and £2.86 for sparkling wine, plus VAT. Rishi Sunak, as Chancellor and later Prime Minister, brought in the new method of taxing wine based on the percentage of alcohol.

He paraded this as a (somewhat weird) benefit of Brexit, because in the EU wine is treated as an agricultural product, unlike beer and spirits which are made to a recipe with pre-defined alcohol levels.

Those two previous bands of duty would be replaced by 66 – as under new post-Brexit UK rules (hooray!), there’s now a rate available for every decimal place, eg 11.3%, 11.4% and so on.

When the new system was introduced in 2023 there was a temporary stay of execution on wines between 11.5% and 14.5% abv (about 85% of wine sold): a fixed rate of £2.67 per bottle ran from 1/8/23 to 1/2/25. This 20% duty increase on most still wines – from £2.23 to £2.67 (54p a bottle with VAT) – was the largest in 50 years.

The so-called ‘easement’ therefore left any new Government to be lumped with rolling it out. Sadly, Labour did just that, and a pile of red tape landed on wine merchants, importers, agents, bonded warehouses and customs agents (which we’ve only needed since Brexit), plus higher duty rates today for all still wines over 10.5% abv.

Much higher duty rates

As the chart shows, some wines continue to see substantial hikes in UK duty. A red, say, of 13.5% will have a rate of £3.10 plus VAT come 1 February 2026, a rise of just under 40% in 30 months. Today, a 13.5% wine for £9 includes 50% UK tax (£1.50 VAT and £2.99 duty). One at 14.5% will see almost a 50% duty increase in that same timeframe, up from £2.23 to £3.33 duty per bottle plus VAT.

At the cheaper end of the scale, a whopping proportion goes in UK tax to the Treasury. £6.75 is, allegedly, the average price of the 1.1 billion bottles sold in the year in UK supermarkets and large stores, according to the WSTA’s annual review in July 2025.

On a wine at 13% abv that £6.75 includes £4 in UK tax – £2.88 duty and £1.13 VAT. With what’s left, the £2.75 has to include the retailer’s margin, plus shipping, logistics and bottling, and the wine itself. (At 12% abv there’s £3.79 or 56% UK tax – £2.66 duty and £1.13 VAT.)

50% UK tax on wine in 2025

Here’s a fun graphic. These are the price points at which wines with different alcohol levels attract 50% UK tax – the duty and the VAT. This is before the increases in 2026. Margins and costs may vary, of course, but on the £3.50 to £5 that’s left respectively, there are plenty of factors to take into account.

As you can see, there’s not a large wedge remaining for the poor farmer. Nor the wine itself.

The highest wine duty in Europe

Here are the myriad of UK duty rates compared to those in the EU. These are the 2025 figures, so from February 2026 the UK will have the highest rates in Europe for any wine over 13% abv. Naturally enough, many wine producing countries only charge VAT and have no duty, but countries like the Netherlands and Belgium levy much lower duty than the UK.

Let’s not forget Sunak’s Budget speech back in October 2021: “We are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years,” While Sir Keir Starmer wrote a piece in The Times on 28 January 2025 called “We’ll cut the weeds of regulation and let growth bloom’.” You can’t make it up.

Higher duty, less money for the Treasury

When the Government introduced the final change in the new duty system in February 2025, with scores of higher duty levels, the OBR’s forecast for total alcohol duty receipts was £13.1 billion, with wine accounting for £4.9 billion – the largest share. The screenshot above was taken from the new alcohol duty system on the House of Commons website.

Wine has been a consistently reliable contributor to the Exchequer as my table above shows. Many of us in the trade have long argued that hitting wine too hard will see greatly reduced sales, a compromised product and less revenue for the Treasury.

Wine tax receipts are down considerably this year – in the region of 6% – despite the substantial duty increases, and in this financial year to April 2026 we could see the lowest annual total for wine duty collected this decade – I’d predict around £4.4 billion. Oh, and the OBR have just downgraded their forecast of alcohol duty receipts from £13.1 billion to £11.9 billion. The increase come February won’t help.

So who wins? And we haven’t even touched on the impact on the hospitality sector.

Onwards and upwards.