2025 Alcohol Duty Changes

22 December 2024

Important Update on Alcohol Duty Changes – What You Need to Know

On Wednesday, 30th October 2024, the Chancellor announced the new Labour Government’s first budget, which included updates to Alcohol Duty legislation. Here's what you need to know:

Key Points

• From 1 February 2025, alcohol duty on non-draught products will increase in line with the forecasted RPI inflation rate of 3.65% for the 2nd quarter of 2025.
• The temporary easement for wine alcohol duty bands will also end on this date.

The Purpose of the New Duty Tax Bands

In August 2023, significant changes were made to alcohol duty legislation, introducing standardised tax bands across all types of alcoholic drinks. These bands are based on the litres of pure alcohol in the product, starting from 0.1% ABV upwards.

This reform aimed to simplify the system, reducing the number of tax bands for non-draught products from 15 to 8. However, in practice, calculating and applying duty has become more complex—each 0.1% ABV increment within a tax band results in varying duty charges. For instance, a 75cl bottle of wine with 11% ABV incurs a duty different from one at 11.1%.

To ease the transition, a temporary easement allowed wines between 11.5% and 14.5% ABV to assume a standardised strength of 12.5% ABV for duty calculations. However, starting on 1st February 2025, this easement will end.

From this date:

• Wines within the 11.5%-14.5% ABV range will be taxed at 30 rates depending on their strength, declared in 0.1% increments.
• The duty rates introduced on 1st August 2023 will increase by the forecasted 3.65% RPI inflation rate.

Alcohol Duty 2025 | What Does This Mean for You?

In simple terms, alcohol duty will rise again on 1st February. The impact will include:

• Still and sparkling wines increasing by an average of £0.15 per bottle.
• Broader adjustments across all alcohol categories based on the new rates.

This timing aligns with the annual price list updates typically released by the wine and spirits industry.

What Are Your Options?

To navigate these changes, you could:

1. Update prices: Apply the duty increase to your wine lists or retail prices from 1st February.
2. Stock up: Build up inventory before 31 January 2025 to delay the impact of the price increase. Review your pricing and menus in March.
3. You can adapt your range: Shift your offering to include more lower-alcohol wines, beers, and spirits. You can view our range of budget-busting wines here (this is where we will run a separate blog based on the ones you mentioned above)

How Can We Help?

We’re here to support you through these changes. Your Account Manager is on hand to provide advice tailored to your business needs, ensuring you’re prepared with minimal disruption.

In addition, we’re working closely with our suppliers to explore opportunities in lower-ABV wines and other innovative solutions to help you create value ahead of February 2025. Keep an eye out for further updates.

If you have any questions or concerns, don’t hesitate to contact your Account Manager. We’re here to help every step of the way.

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