The drinks industry is popping corks today at the news that the UK’s archaic and over-complex alcohol duty system is going to be radically overhauled – however the delay before it comes into effect concerns many while others don’t feel the Chancellor went far enough.
The Wine & Spirit Trade Association (WSTA)
Miles Beale chief executive of the WSTA, said the decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, “giving everyone a much-needed break to help them recover from the pandemic”.
“Chancellor Rishi Sunak should be commended for listening to our calls for support and understanding that punishing tax hikes are not the best way to reinvigorate the sector,” he said. “By offering continued respite to the UK wine and spirit sector his actions will help save jobs and – in time – replenish revenues to the Treasury through growth in our potential-filled sector.
“We welcome the reduction of the sparkling wine super tax, which is long overdue. We look forward to seeing the detail of a new system which should remove the existing unfairness of how different products are treated.”
Andrew Carter, CEO of English sparkling wine producer, Chapel Down
Andrew Carter, CEO of English sparkling wine producer Chapel Down, said it was encouraging to see support and recognition of the industry’s success from the governement.
“English wine is a 21st-century success story, and demand for Chapel Down’s award-winning sparkling wines has never been higher. It’s very encouraging to see the support and recognition of the industry’s success at a governmental level, which is the best endorsement we could hope for. The English wine industry is one of the UK drinks industry’s fastest-growing categories, and consumers are discovering the quality on their doorstep,” he said.
“The duty saved will enable the industry to create jobs, support families, and bring even more young talent into this exciting, developing sector as it recovers from the pandemic. The English wine industry – comprising of 3,800 acres under vine, 800 vineyards, 178 wineries – is expanding rapidly and governmental support provides the opportunity to build English wine on a global level.”
He noted the critical acclai that English sparkling wines are receiving internationally, adding that “The Chancellor’s patronage will make us more competitive against our worldwide competitors and this change will enable us to reinvest in our business and to continue growing at pace. Chapel Down, along with the wider English wine industry, will be raising a toast to the Chancellor for his support this week.”
Sue Rathmell, partner at MHA
However, accountancy group MHA, described the lack of an extension to the reduced VAT rate was a “a crushing disappointment” and the business rates relief and freezes on duty rates for alcohol would not be able to compensate the hospitality sector for the return of the full 20% VAT rate in April 2022.
“In today’s autumn budget, the Chancellor ignored the widespread call from the hospitality industry, including 200 bosses, for the VAT rate on hospitality businesses to be held at 12.5%. This is a crushing disappointment for the sector,” she said.
“The UK tourism sector was badly hit by the Covid-19 pandemic and was hoping for an extension of the VAT cut to help efforts to rebuild. This is a massive blow to the cinemas, theatres, festivals, restaurants, pubs, hotels, theme parks and zoos around the whole of the country. Businesses were hoping that the Chancellor would allow them to enjoy another summer with the lower VAT rate, encouraging people to holiday in the UK. Instead they have been disappointed yet again.
“Now the reduced VAT rate will return to the full standard rate of 20%, with effect from 1 April 2022 as previously announced. The sector was given the benefit of a 5% rate from 15 July 2020 to 30 September 2021 and the rate increased to 12.5% from the start of this month.
“However, there were some good measures in the budget. Pubs will be pleased to see duty rates on alcohol being frozen for another year, together with the consultation on the reform of alcohol duties and a potential cut in duties being applied to draught beers and ciders. In addition up to 400,000 retail, hospitality and leisure properties should feel the benefit of £1.7 billion business rates reliefs which could halve their business rate bill.
“Overall there is some hope for the recovery of the sector, but the lack of continuing VAT support is a huge disappointment.”
Stephen Davies, CEO of Penderyn Distillery (The Welsh Whisky Company)
“We have been campaigning for a freeze on duty which has been achieved so that is good news for the immediate future although we should keep in mind that we still have one of the highest alcohol duty regimes in the world.”
“The hospitality industry really needs more action now though and so a lack of immediate progress there is a worry.”