Price of wine and spirits to increase while tax on draught pints to drop amid changes set to come into effect on Saturday

1 February 2025, 13:15

The price of wine and spirits is set to increase from Saturday - yet the price of draught beers will slightly drop.

Taxes are set to rise in line with inflation on Saturday, while a new system of duties will be based on the strength of drinks.

It is thought that the duty on a bottle of 14.5% ABV - alcohol by volume - red wine will increase by 54p.

Duties on a bottle of gin may go up by '32p'.

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Meanwhile, there is set to be a small cut in duty on draught pints. The 1.7% tax cut was announced in the Labour government's Budget last year, representing the first cut in 10 years.

This means there will be a 1p tax cut on draught pints below 8.5% ABV.

The alcohol tax will increase by 3.6% from Saturday.

This will bring the tax in line with the Retail Prices Index measure of inflation.

A trade body for the wine and spirits industry said the hikes would be a 'bitter blow', the BBC reported.

According to the Wine and Spirits Trade Association (WSTA), the rises mean duty on a 14.5% ABV bottle of red wine will have surged by 98p over the previous 18 months, reported the BBC.

"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," WSTA chief executive Miles Beale told the BBC.

"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."

Meanwhile, a Treasury spokesperson said: "The alcohol duty reforms have modernised and simplified the duty system, prioritising public health and incentivising consumption of lower strength products."

Labour is also increasing 'small producer relief' for alcohol products below 8.5% ABV, which 'tapers' away as production rises.

The government said the measures are worth '£85m'.

The Exchequer Secretary to the Treasury, James Murray, reportedly said the measures would help "boost sector growth".

Chancellor Rachel Reeves on public spending

Yet the policies have amassed criticism, with critics suggesting the upcoming rise in employers' National Insurance contributions and minimum wage increases may result in pubs putting draught prices up in a bid cover the new costs.

Rachel Reeves' NI announcement in the first Labour budget since 2009 was higher than initially expected. It means of the £40 billion set to be raised through taxes as part of the budget, £25bn will come from the rise in employers' national insurance contributions.

The Chancellor also confirmed that the level at which employers start paying national insurance on an employee's salary will fall from £9,100 per year to £5,000.

While announcing the rise in NI contributions in the Budget, Chancellor Rachel Reeves said: "I know that this is a difficult choice. I do not take this decision lightly," she says.

"We are asking business to contribute more, and I know that there will be impacts of this measure felt beyond businesses, too, as the [Office for Budget Responsibility] have set out today.

"But in the circumstances that I have inherited, it is the right choice to make," she insisted.

Some pub owners have reported that they are expecting a '30p to 40p' increase in pint prices due to higher employment costs, the BBC reported.

Wetherspoons chief executive Tim Martin claimed that the rise in employment costs would cost the company '£80m a year'.

Mr Martin said the Budget had "a significantly bigger impact on pub and restaurant companies than supermarkets".

He also criticised politicians for being "dinner party goers, rather than pub goers".