Wine Society describes planned alcohol duty changes as ‘ludicrous, expensive and probably unworkable’

British consumers have been told that the price of some of their favourite red wines could increase by more than 40p next year after the government ignored pleas from the wine industry to abandon complex post-Brexit tax changes.

The chief executive of Majestic Wine, John Colley, said the new alcohol duty system, which comes into effect in February 2025, would increase the number of tax bands for wine from one to 30, and cost businesses huge sums of money to administer.

The chief executive of the Wine Society, Steve Finlan, said the plan was “ludicrous, expensive and probably unworkable”.

The post-Brexit overhaul of alcohol taxation, which would tax drinks on alcohol by volume (ABV) rather than the type of alcohol, was officially initiated last August proposed by the Treasury during Rishi Sunak’s time as chancellor. According to this scheme, the amount of duty increases by 2p for every 0.1% increase in alcohol content.

The government recognized the new administrative load for businesses and implemented an 18-month “easement” period. Throughout this time, all wines between 11.5% and 14.5% would be taxed £2.67, which is the duty rate for 12.5% ABV.

The wine industry has been urging the government to make these easement rules permanent. However, earlier this month, Gareth Davies, the exchequer secretary to the Treasury, confirmed that the policy would proceed as planned.

Businesses like Majestic Wine, which operates more than 200 stores nationwide, have voiced their concerns, stating that this change would result in higher prices and an immense administrative burden for sellers.

“The minister demonstrated in this debate a worrying lack of understanding of our sector, suggesting that the alcohol duty system has become simpler and easier since Brexit,” said Colley. “That is simply not the case. In fact, the system in place pre-Brexit was much simpler to administer.”

Analysis by the Wine and Spirits Trade Association (WSTA) has found that when easement ends prices on about 43% of wines will increase. The tax on a bottle of wine with an ABV of 14.5%, the highest percentage to come under the rules, will increase by the maximum 42p to £3.09.

Red wines will be most affected given their higher alcohol content, with prices on 75% expected to rise from next February.

The changes will lead to huge administrative costs for businesses, which will have to work out the tax due on each wine. Even small shops can sell hundreds of different wines.

The co-founder of Cambridge Wine Merchants, Hal Wilson, explained that new regulations are set to enforce the inspection and documentation of the alcohol content in roughly 90% of their purchased bottles. Wilson expressed concerns over the seven-fold increase in workforce tasks, hinting at the unfeasibility of such a proposition for their trade.

Representing the Wine Society, Finlan elucidated concerns for the establishment that houses myriad wine varieties. He assessed the new alterations as nearly impossible to implement, resulting in inevitable price surges that will affect the consumer.

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At a Westminster Hall debate brought by the former health minister Will Quince last week, some Brexit-backing MPs, including Priti Patel and Julian Sturdy, supported the industry’s calls for a continuation of the status quo.

The latest changes come after wine sellers were hit with a 20% rise in excise duty on 85% of wines last year, the highest rise in 50 years.

The chief executive of the WSTA, Miles Beale, said: “Cutting red tape should surely be a priority for the Tories, who often cite it as a ‘Brexit benefit’.

“We are not asking for further reform, we are merely calling on the government to retain the existing, simplified procedure for taxing wine to avoid what is going to be a very costly mistake.”

A Treasury spokesperson said: “We engaged closely with the wine industry throughout the consultation for historical reforms to alcohol duty. The industry has benefitted from freezes at six out of the last 12 fiscal events.”

The changes will also result in the sparkling wine premium being removed, so that sellers pay the same amount of duty on them as still wines of the same ABV. The duty on many lower-strength drinks, such as beer, has been cut.