The recent budget statement (30 October 2024) confirmed two changes to alcohol duty in the UK. One, the planned end of duty easement for 1 February 2025 will go ahead as planned. Two, alcohol duty on non-draught products will rise in line with Retail Price Index inflation. In this blog, we take a look at these two changes to alcohol duty and detail how Bevica continues to help drinks businesses manage all changes to alcohol duty.
The end of temporary wine duty easement Since 1 August 2023 (when the new alcohol duty system came into effect) there has been a period of duty easement aimed at making the transition easier for businesses. During this time, all wine of an alcoholic strength of at least 11.5% but not exceeding 14.5% has been treated, for the purposes of duty, as if it were of an alcoholic strength of 12.5%.
As of 1 February 2025, this special flat rate will come to an end and all wines will then be calculated according to their specific %ABV. This is having a knock-on effect on the work that wine importers and distributors need to do: ensuring they record the correct ABV% for their wine products, reassessing sales prices and communicating this change to their customers.
Increase in alcohol duty announced in 2024 budget In addition, the Government announced an increase in all Alcohol Duty rates for non-draught products in line with Retail Price Index inflation. This increase coincides with the ending of easement.
The new UK alcohol duty rates, as from 1 February 2025 for wine are detailed in the table below:
Duty calculation: Duty £ = (Litres of liquid * ABV%) x £29.54)
What do these changes to alcohol duty mean for the drinks industry? Following the budget announcement, there has been widespread coverage in the trade press on the impact of these announcements. Concerns have been raised for the hospitality sector in general with higher prices for wines going forward as well as the higher staff costs as a result of increases in wages and employers’ national insurance.
Andrew Bewes, MD of Bevica client, Hallgarten & Novum Wines , issued a press statement following the announcement which highlighted a two key challenges faced by operational teams in wine trade going forward:
Wine lists across will be vastly affected after 1 February as the impact of the end of duty easement and the alcohol duty increase is implemented throughout the supply chain.
Trade customers will also have to manage the impact of constantly changing cost bases (wines may change % ABV as they move from one vintage to another) on their wine lists and EPOS system set ups.
It is clear that communication within the supply chain about the upcoming changes and how they will affect all the businesses within it is key.
How Bevica can help wine businesses manage their duty obligations The beauty of Bevica is that its duty management functionality has built-in capability to calculate duty amounts in both the old system of duty per hectolitre (hL) of alcohol and the new duty system of litres per % ABV.
At the end of duty easement, current clients will need to ensure that the % ABV is accurate for all their alcoholic products in the Bevica system. Wine products that are between 11.5-14.5% ABV will then need to have their duty code calculation changed to reflect the new rate. This change can be prepared in advance and set to trigger on the close of business on 31 January 2025. Once completed, the Bevica system will automatically calculate the business’s new duty obligations going forward.
To help current clients with these changes, there are a number of how-to articles available on the Bevica support portal .
For new clients, coming to the Bevica system after 1 February 2025, the set up for dutiable products is even simpler. Bevica’s out of the box duty management features provide the set up needed to make sure all financial and logistical elements are covered.
Want to find out more? Developed over the last 20 years and powered by Microsoft Dynamics 365 Business Central, Bevica is a powerful best practice software solution designed specifically for drinks industry businesses. For more information about the Bevica duty management capabilities and much more, book a demo with us.
