DRINKERS face paying more for their favourite drinks when new tax rates come in this week.
The price of some drinks will creep up by as much as 32p while the cost of certain bottles of wine will climb by 54p.
The blow comes from duty increases announced by Rachel Reeves in the Autumn Budget.
Hated alcohol levies will be hiked in line with RPI inflation on Saturday, February 1.
Alcohol duty is charged on all drinks which are more than 1.2% ABV strength, either at the point of production or when they are imported.
Spirits like gin and vodka will see a 3.6% price rise, adding roughly 30p to a bottle.
Fortified wines like port and sherry also face a 3.6% increase.
Sparkling wine duty decreases slightly, by 1p per bottle.
Beer and cider on draught benefit from a 1.7% duty cut, while duty on other formats rises 3.6%, and pre-mixed drinks see a 3.6% increase.
However, wine is the hardest hit, with a 20.2% duty increase on a bottle of 14.5% ABV wine, adding 54p.
This is because the government is introducing a new system which taxes wine by strength.
Wines between 11% and 12.5% ABV will see small duty fluctuations, either slightly increasing or decreasing.
However, for wines stronger than 12.5% ABV, duty will increase substantially, with the largest increases impacting higher strength wines.
This latest increases comes on top of previous duty hikes in August 2023, resulting in a whopping 98p total increase on a bottle of 14.5% ABV red wine in just 18 months.
The government holds ultimate responsibility for determining whether to increase the duty rate in line with inflation each year.
A second tax hit will land in April with new recycling fees for packaging waste, adding a further estimated 18p to spirits and 12p to wine.
The wine and spirits industry warns that these combined tax increases will inevitably push up prices for consumers.
Expect to pay at least 60p more for a bottle of gin and around 80p more for a bottle of 14.5% ABV red wine with both changes coming in.
The industry also points out that repeated tax hikes have already led to a decline in alcohol sales since 2023 and reduced tax revenue for the Treasury.
The Wine and Spirit Trade Association (WSTA) argues that these measures are counterproductive, hurting businesses and consumers while failing to achieve the government’s goal of boosting public finances.
Miles Beale, chief executive of the trade body, said: “The Government continues to claim that the tax hikes are part of their big plan to plug the black hole in the public finances, but a series of record-breaking tax levies are doing the exact opposite.
“There are no winners under the UK’s punishing alcohol tax regime – higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more.”
BREWERS WARN OF HIGH PRICES
Higher taxes mean higher prices as companies pass on the rise to customers.
It comes as Heineken said it would hike the price of its draught beer by an average of 2.97% for pubs from next month because of the new recycling fees alone.
The hike in the wholesale cost of beer could be passed on to customers if pubs, already under-pressure, cannot absorb the additional costs themselves.
It means the price increase could affect the cost of beers on tap such as Birra Moretti, Heineken, Fosters and Tiger.
The major brewer said the change will come into force on all deliveries from February 1, 2025.
NEW TAX ON WASTE PACKAGING
Punters could be set for another blow come April, when a new tax could see products sold in glass bottles rise by 10p.
In December Parliament passed a new legislation called the packaging extended producer (pEPR) scheme.
The aim of the new legislation is to shift the cost of household recycling from councils back onto the companies using the packaging.
Government also wants to reduce packaging waste and litter, and to improve the quality of materials recycled.
It means that come April brands and retailers, such as beer and wine makers, will have to cover the costs for their packaging’s collection, sorting, recycling or disposal.
Prior to this local authority covered the costs.
Industry body British Glass said fees for glass beverage packaging will be around “49 times higher than other materials.”
That’s because the new tax is based on the weight of packaging, meaning glass will have higher fees than lighter materials.
In a statement British Glass representatives said: “Heavier containers like glass will incur higher levies, meaning products in glass bottles and jars are set have an additional cost in excess of 10p.”
Many wine, spirit and beer makers choose to package their products in glass bottles.
So if they incur a higher tax on this product it could lead them to raise prices for consumers to help offset the cost.
HOSPITALITY IN PERIL
MANY hospitality and pub groups have warned they could be forced to raise prices following the recent Budget announced by Labour Chancellor Rachel Reeves.
Last week, the head of Revolution Bar said the move would have a very “damaging impact” on the group.
In a statement to investors, chief Rob Pitcher said the reduction in the National Insurance thresholds would be “regressive” and “offer no clear pathway for economic growth within the hospitality sector”.
The chain closed 25 sites last year as part of a restructuring plan, blaming Brits spending less on nights out for its troubles.
Chief executive officer of Fuller’s, Simon Emeny, previously told The Sun the price of beers at its hotels and boozers would likely rise by 10p.
Wetherspoons’ boss Tim Martin also said the hike in increased staffing costs had a “significantly bigger impact on pub and restaurant companies than supermarkets”.
He said in Spoons’ results statement: “Wetherspoon therefore calls upon Sir Keir Starmer to redress this imbalance, thereby striking a blow for tax equality and ending discrimination in favour of dull (yawn, yawn) dinner parties.”
Chancellor Rachel Reeves said during her autumn statement she would raise employers’ National Insurance contributions (NICs).
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It’s estimated that the move will raise £25billion – the equivalent of around £800 per employee for each firm.
At the same time, the minimum wage will rise to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
Emma McClarkin, chief of the British Beer and Pub Association, told The Sun these changes leave hospitality businesses on a “cliff edge”.
The impact of the budget alongside changes to tax could leave the sector with a £650million loss.
She said: “Brewers and pubs pour billions into the economy and Treasury, support more than a million jobs and are a cornerstone of the community.
“However, we face a cliff edge in April when a staggering £650m extra in costs will kick in, including the ending of vital business rates relief, new employer costs, and the beer bottle tax.”
The industry leader said these changes could “lead to businesses being forced to pass on extra costs to customers”.
