Sales of spirits brought more money to the Treasury than beer for the first time ever, latest HMRC figures revealed this week.
The Wine and Spirit Trade Association says the gin boom – sales of which have surged 12 per cent the fastest growth rate of any spirit drink according to the latest WSTA Market Report – has helped spirits overtake beer in an historic industry first.
The Treasury earned an extra £225m in revenue from spirit drinkers thanks to a freeze in spirits duty in the 2016.
Budget, taking its total spirits duty to over £3.38bn. Beer duty was also frozen and led to a contribution of £3.32bn.
However, concern has been raised that the growth in sales of spirits and duty revenue could falter as spirit makers were slapped with a painful 3.9 per cent rise on alcohol duty in the March Budget which added another 30p to a bottle.
The UK’s high duty rates mean that UK consumers pay 25 per cent of all spirits duties collected by EU member states and a staggering 76 per cent of the average price of a bottle of gin is taken up in duty and VAT.
The Chief Executive of the Wine and Spirit Trade Association, Miles Beale, said: “The WSTA dubbed 2016 the year of gin and the gin boom has had a large part to play in the windfall now being enjoyed by the Treasury. The seven per cent increase on revenue takings came as a result of the Chancellor freezing spirit duty in 2016 and allowing the industry to grow and invest. It proves the point that cutting or freezing spirits duty brings rewards, which is why the inflation busting rise in duty this year was such a disappointment and threatens the industry’s ability to invest, grow and export.”
Wine remains at the top of the table cashing in over £4bn for revenue coffers this financial year.
The UK has the fourth highest spirits duty rates in the EU with 77 per cent of a bottle of spirits accounted for by tax.
Every time we buy an averaged priced 70cl bottle of spirits, at 40 per cent abv, £10.33 goes straight to the Chancellor’s purse.
The UK pays more in alcohol duty than Germany, France, Poland, Italy and Spain combined.