An interesting email from Majestic wines this morning.
More government lunacy....
Dear Customer,
You may have already read about the change in the new alcohol excise duty regime that is due to be implemented from 1st February 2025. Prior to the upcoming Budget, I wanted to take the opportunity to explain it further and share the impact it would have on us all next year.
The previous Government planned to impose a ‘tax-by-strength’ policy towards duty on alcohol. But because of the complexities involved in implementing this change, last year a ‘temporary wine easement’ was introduced, taxing all wines in the 11.5% - 14.5% ABV range with one single charge of £2.67 – the same duty rate for 12.5% ABV wines. You can read more about this here.
However, from 1st February 2025, the wine easement will disappear and be replaced by a separate duty charge for every 0.1% of ABV – meaning wines between 11.5% ABV and 14.5% ABV will have an unbelievable 30 different duty rates.
For example, 12.0% ABV wines will be taxed at £2.56 per bottle, whereas 12.7% ABV wines will be required to pay duty of £2.71 per bottle. A 14.5% ABV bottle of wine in the 30th band will have duty of £3.09, an extra 53p per bottle, an increase of over 20%.
At the time the policy was launched, the Treasury stated their aim was to create a duty system that would be simpler and fairer for wine businesses to administer. In reality, companies such as Majestic will need to invest six-figure sums just to develop the systems required to handle the new approach – due to the number of different wines that are produced and the variations in ABV% – with ongoing annual administrative costs likely to run into similar sums.
Unfortunately the increase in duty, coupled with the extra burden of administrative costs, could well result in increases to the prices consumers pay for wine. This will fuel inflation further at a time when we believe all steps should be taken to reduce inflationary pressures.
Today, wine is the most popular alcoholic drink in the UK and we are also the second-biggest importer of wine in the world as a nation, championing a diverse range of styles from all corners of the globe. Yet if the government presses ahead with these changes from 1st February 2025, it will undoubtedly impact our market and your favourite wines.
This is because there is a risk that producers will stop exporting wine to the UK entirely, due to the immense administrative burden. Smaller family-run vineyards, which we value so much, may not want to change processes that have been in place for generations, when they could easily export their wines elsewhere in the world without any additional costs and red tape
While Majestic, as the UKs largest wine merchant, would undoubtedly have to adapt, the industry also has concerns about the future of more than 900 independent wine merchants operating across the country. We fear that the cost and complexity of these unnecessary new alcohol duty rules could pose a threat to these smaller businesses and the livelihoods of those working tirelessly within them. At a time when supporting smaller businesses and local high streets is very important, this policy would do the polar opposite.
We have been engaging with Treasury officials alongside the Wine and Spirit Trade Association (WSTA), to lobby for urgent change. But with less than four months remaining until this policy comes into force, I wanted to explain to our loyal customers what these changes will mean from February 2025 – basically your favourite wines could increase in price, or at worst disappear from shelves altogether next year.
Following the General Election, Majestic, the WSTA and many other wine businesses began engaging with the new Government to explain the consequences of the duty regime they inherited and advise them of the negative impact it will have on our vibrant industry.
I would ask you, as a passionate and knowledgeable wine customer, to engage with your locally elected MP and share your view on the impact that this poorly thought through alcohol duty policy will have on all wine merchants operating in your constituencies
Regards,
John Colley,
Chief Executive, Majestic
More government lunacy....
[td]Dear Customer,
You may have already read about the change in the new alcohol excise duty regime that is due to be implemented from 1st February 2025. Prior to the upcoming Budget, I wanted to take the opportunity to explain it further and share the impact it would have on us all next year.
The previous Government planned to impose a ‘tax-by-strength’ policy towards duty on alcohol. But because of the complexities involved in implementing this change, last year a ‘temporary wine easement’ was introduced, taxing all wines in the 11.5% - 14.5% ABV range with one single charge of £2.67 – the same duty rate for 12.5% ABV wines. You can read more about this here.
However, from 1st February 2025, the wine easement will disappear and be replaced by a separate duty charge for every 0.1% of ABV – meaning wines between 11.5% ABV and 14.5% ABV will have an unbelievable 30 different duty rates.
For example, 12.0% ABV wines will be taxed at £2.56 per bottle, whereas 12.7% ABV wines will be required to pay duty of £2.71 per bottle. A 14.5% ABV bottle of wine in the 30th band will have duty of £3.09, an extra 53p per bottle, an increase of over 20%.
At the time the policy was launched, the Treasury stated their aim was to create a duty system that would be simpler and fairer for wine businesses to administer. In reality, companies such as Majestic will need to invest six-figure sums just to develop the systems required to handle the new approach – due to the number of different wines that are produced and the variations in ABV% – with ongoing annual administrative costs likely to run into similar sums.
Unfortunately the increase in duty, coupled with the extra burden of administrative costs, could well result in increases to the prices consumers pay for wine. This will fuel inflation further at a time when we believe all steps should be taken to reduce inflationary pressures.
Today, wine is the most popular alcoholic drink in the UK and we are also the second-biggest importer of wine in the world as a nation, championing a diverse range of styles from all corners of the globe. Yet if the government presses ahead with these changes from 1st February 2025, it will undoubtedly impact our market and your favourite wines.
This is because there is a risk that producers will stop exporting wine to the UK entirely, due to the immense administrative burden. Smaller family-run vineyards, which we value so much, may not want to change processes that have been in place for generations, when they could easily export their wines elsewhere in the world without any additional costs and red tape
While Majestic, as the UKs largest wine merchant, would undoubtedly have to adapt, the industry also has concerns about the future of more than 900 independent wine merchants operating across the country. We fear that the cost and complexity of these unnecessary new alcohol duty rules could pose a threat to these smaller businesses and the livelihoods of those working tirelessly within them. At a time when supporting smaller businesses and local high streets is very important, this policy would do the polar opposite.
We have been engaging with Treasury officials alongside the Wine and Spirit Trade Association (WSTA), to lobby for urgent change. But with less than four months remaining until this policy comes into force, I wanted to explain to our loyal customers what these changes will mean from February 2025 – basically your favourite wines could increase in price, or at worst disappear from shelves altogether next year.
Following the General Election, Majestic, the WSTA and many other wine businesses began engaging with the new Government to explain the consequences of the duty regime they inherited and advise them of the negative impact it will have on our vibrant industry.
I would ask you, as a passionate and knowledgeable wine customer, to engage with your locally elected MP and share your view on the impact that this poorly thought through alcohol duty policy will have on all wine merchants operating in your constituencies
Regards,
John Colley,
Chief Executive, Majestic
