Alcohol Duty Changes February 2025: How Will It Affect Consumers?

On the 1st February 2025, our wondrous government decided that one of the best ways to raise tax in our struggling economy was to hit the average wine, beer and spirits drinker as well as every single hospitality establishment. As if hospitality hasn’t faced enough in recent years…

Rising costs have rather been the theme since Covid but there are none quite so close to our heart as, of course, alcohol.

What is the new alcohol duty?

Alcohol is taxed according to its ABV on drinks over 1.2% ABV. The initial increase on alcohol duty rises came in August 2023, however, wine between 11.5-14.5% ABV was given an 18-month easement period where they were all taxed as if they were 12.5% wines. The cost to us consumers of this duty was £2.67. This ended as of Feb 2025. Not good news.

This new legislation has introduced alcohol duty bands with each 0.1% increment taxed differently, meaning that your 12.5% wine will have lower tax than a 12.6% and so on. This has introduced 30 new tax levels for your 11.5%-14.5% wines - that’s bureaucracy in action. Adding to this, duty rates are also going to rise in line with inflation which is predicted to be 3.65%. This inflation matching measure had been frozen since 2020, and for some drinks like beer, since 2017. All in all, it’s a double tax grab raising both duty by inflation and increasing the ABV tax.

The effects on your favourite drinks

How will Wine be affected?

Ignoring inflation and just taking into account the easement period ending, according to the Wine and Spirits Trade Association, about 43% of wines are going to increase in price. As a rule of thumb, you’ll see red wines increase the most (expected to be about 75% of all reds currently on the market*) whilst wines in the 11.5%-12% range will improve their rates. There is some good news here for sparkling and Champagne duty too.

But, as soon as you account for the 3.65% inflation you can see how even this small band is going to cost more in the end. It can’t be stated enough how this is double taxing across the board, and it will hurt.

Have a look at this handy duty comparison chart for most wines:

It’s also worth pointing out how fortified wines (Sherry, Port etc) will rise too. For example, a Sherry at 15% will have a duty increase of 12p, and a port of 20% an increase of 16p. The same negative results for liqueurs as well.

How will Beer be affected?

Some small consolation was a 1.7% reduction in draught beer, cider and other tap-poured drinks (below 8.5%) which, whilst welcome, is a tiny saving of about 1p that the pubs simply won't pass onto you, especially considering the rise in employers' National Insurance contributions and the increase in the minimum wage. In fact, pints will almost certainly still increase in pubs. This tiny saving will just help the pubs, slightly…

Otherwise, expect your home brews to go the opposite way with increases inline with 3.6% inflation and none of the draught duty relief.

How will Spirits be affected?

Being a higher ABV, unsurprisingly the tax here is heaviest. As some examples, a 37.5% Vodka will jump up by 30p and a 40% Gin by 33p. This one seems very unfair and disproportionately affects distillers over wineries and breweries.

What the future holds? Is this a good idea?

It’s not all panic across the board yet, although you’ll likely have spotted that some of your favourites have probably gone up already. This, I’d suggest, is retailers preparing the ground for higher increases to come, or mitigating later requirements to up their prices.

Most of these changes will take time to affect both every single wine and you, the consumer, as our wine retailers and supermarkets will have prepared for the inevitable backlash. Whether they have pre-stocked to avoid paying the duty or other means, there is going to be a slow period of introduction to the new prices. After all, warehouse space to pre-load is only so big.

The Backlash

The most vehement opposer to this has been The Wine and Spirit Trade Association who point out that the government’s plan to raise taxes through this measure has had the precise opposite effect in the past. They cite that the “latest figures from HMRC show that alcohol tax receipts have fallen by £209 million in the financial year (April to December 2024) compared to the previous financial year, showing that tax increases supress consumer demand and reduces Treasury coffers.”** Compelling stuff.

Wine retailers, particularly smaller businesses, are facing increased costs, administrative nightmares, reduced consumer demand (thanks to price inflation) and the need to streamline their range. Everybody loses in this case. Wine makers, brewers and distillers all face the exact same issue. Moreover, in the past a few bulk wine brands have reduced their alcohol content to combat duty rises which unfortunately does affect the flavour, balance and body. These have been noticed in the past and led to unhappy consumers. Bad for the consumer and the wine maker.

Make no mistake, our choice on the market is being squeezed, our wallets are being squeezed and businesses, both small and large, are being squeezed. We don’t like to get too political on WinesDirect, but the stats overwhelmingly point to this taxation turning the screws on an already overtaxed and overburdened industry without actually creating more tax revenue for HMRC at the end of all of it. There is a fair argument that alcohol abuse costs the NHS money, but one would think it would be better to have long terms plans on educating people about the risks of consumption, rather than squeezing profits, wages and margins to cause future economic troubles.

I’m afraid it doesn’t even end there. Unfortunately, it is currently set to get worse by the end of April when new waste packaging recycling fees will be introduced, “adding around 18p to a bottle of spirits and 12p to a bottle of wine.”** Environmental taxes are certainly a good thing, but when they come in so soon after an already devastating and unnecessary tax rise, this new administrative burden is not well timed and a bit of a death knell for small wine stores.

Sadly, the most we can do in our democracy is yell at our MPs and express displeasure online. Might even be worth tweeting (or X’ing?) Elon Musk. If he picks it up, it’ll certainly get noticed. For now, take advantage of Wine Offers more than ever!

*Source: The Guardian: How will alcohol duty changes affect the price of drinks? Here

**Source: WSTA Here