Sparkling wine, cider and draft beer are all getting cheaper after the alcohol tax was cut in Rishi Sunak’s latest budget.
The Chancellor of the Exchequer announced a radical simplification of the tax by reducing the number of main tax rates from fifteen to six.
Alcohol is now taxed on its strength instead of the previous system that taxed some carbonated drinks higher.
During his budget speech, Sunak said the UK’s 380-year-old alcohol tax system was “out of date, complex and full of historical anomalies”.
Changes in alcohol tax
Put simply, the new alcohol tax changes will result in higher taxes on beverages with a higher alcohol content.
The move has been praised by Sunak’s supporters as a way to target problem drinkers. However, critics have planned the tariff change and cited the drop in prices of many drinks as an encouragement to binge drink.
- As of February 1, 2023, the following changes to the current system will apply:
- Beverages over 8.5% vol. (Alcohol by volume) pay the same rate of duty. This means Prosecco and Rosé drop by 23 pence per bottle as the premium tariff of 28 percent for sparkling wine is reduced.
- Fruit wine and spirits with a low alcohol content, such as gin and tonics in cans below 3.5% vol., Are becoming cheaper.
- In addition, a lower tariff will be introduced for draft beer and cider from containers over 40 liters, with a reduction of 5 percent.
With Sunak’s new system, many beverages will be cheaper, while spirits will become more expensive.
What is alcohol tax?
The alcohol tax is a tax that varies depending on the strength of the alcohol sold. Beer, cider, wine, and spirits all have their own prices.
For example, a pint of 5 percent beer currently has an alcohol tax of 54 pence, which is 95.40 pence per liter. It is paid in addition to the value added tax (VAT).
Still wine with a strength between 5.5 and 15 percent is charged at a price of 288.65 pence per liter.