Alcohol duties are levied on purchases of beer, cider or perry, wine or ‘made-wine’ and spirits. Made-wine is any alcoholic drink made by fermentation that is not beer, cider, perry, spirits or wine – mead, for example.
In our latest forecast, we expect alcohol duties to raise £11.5 billion in 2017-18. That would represent 1.5 per cent of all receipts and is equivalent to 0.6 per cent of national income. Duty on wine accounts for 38 per cent of all alcohol duty revenue, followed by beer and cider (32 per cent) and spirits (30 per cent).
There are different rates for each type of product:
- The rate on beer (with a strength of between 2.8 and 7.5 per cent) is 19.08 pence per litre for each percentage point of alcohol. For example, the rate on a 5 per cent strength beer is 95.40 pence per litre – around 54 pence per pint. Beers with a strength below 2.8 per cent are taxed at a lower rate and beers with a strength above 7.5 per cent are taxed at a higher rate.
- The rate on wine depends on its strength and whether it is still or sparkling. Stronger wines and sparkling wines are taxed at a higher rate. For a still wine (with a strength of between 5.5 and 15 per cent) the rate is 288.65 pence per litre.
- The rate on spirits is £28.74 per litre of pure alcohol. For a litre bottle of spirits (with a strength of 40 per cent) the rate is therefore £11.50.
- The rate on cider depends on its strength and whether it is still or sparkling. For a sparkling cider (with a strength of between 1.2 and 5.5 per cent) the rate is 40.38 pence per litre – around 23 pence per pint.
VAT is applied after alcohol duty, so, for example, the price of a one litre bottle of a spirits (with a strength of 40 per cent) currently reflects the pre-tax price plus £11.50 of duty plus 20 per cent VAT on both the pre-tax price and the duty.