How to calculate excise duty on alcohol

How to calculate excise duty on alcohol
  • Post last modified:November 15, 2020
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Tax on beers, wines, and spirits: How much do you pay in the UK? Here is a guide how to calculate the excise duty on alcohol.

The UK is known to have some of the highest alcohol duty rates in Europe, alongside Scandinavian countries. Two indirect taxes are charged on alcohol in the UK. All alcohol is subject to the standard rate of value added tax and in addition, excise duties are levied at different rates according to the type of alcohol.

Duty on beer and spirits is charged different rates according to alcoholic content. The rate of duty on wine is applied to the volume of wine and the same duty rate is applied to wine within a range of strengths. Here is another great article about how to calculate the landed cost of imported wines and beers.

The current duty system for alcohol in the UK, and which is governed by EU Directives, is loaded with historical anomalies, and the rules vary dependent on the alcohol type. For example, wine and cider are taxed per litre of product within particular strength bands, but not according to the amount of alcohol, whereas beer and spirits are taxed by their alcohol content. Cider duties are historically far lower than duties for beer, which is one reason why very strong ‘white ciders’ are able to be sold so cheaply.

Guide to calculating excise duty

Check the current rates of duty payable for spirits, beer, wine, made-wine, cider and perry, then work out the excise duty payable. Also keep in mind that every February, the UK government might change and declare for the new year’s excise duty rates.

For example, to calculate the excise duty on 80 cases of whisky 40% alcohol by volume (ABV), each containing 12 x 70 centilitre bottles:

Example

Volume per case: 12 x 0.70 = 8.4 litres
8.4 L x 40% = 3.36 L of alcohol per case
3.36 x 80 = 268.80 litres of alcohol in total
268.80 x £28.74 (Rate per litre of pure alcohol)
Equals to £7,725.31 total excise duty payable.

Duty is charged to the alcohol content. This is calculated by multiplying the bulk litres by the abv of the product. The excise duty is then obtained by multiplying this amount by the spirit duty rate.

Protip. Prepare yourself an excel spreadsheet that calculates the duty on alcohol of your products and link the duty amounts to the cost calculation spreadsheet. This will save huge amount of time and will help you to the calculate the cost and the margin of the alcoholic beverages.

How much is duty on wine in the UK?


Excise duty of per bottle of red wine is £2.23
same duty applies to white wine as well. However, for per bottle of sparkling wine or bottles of prosecco, the duty is £2.86

These are calculated on the volume in Hectolitres and the alcohol by volume, within strength bandings. 

How much Wine Duty you pay depends on the strength of the wine (or made wine) and whether it’s still or sparkling.

Type of wine or made-wineStrength (ABV)Rate per litre
StillMore than 1.2%, up to 4%91.68 pence
StillMore than 4%, up to 5.5%126.08 pence
StillMore than 5.5%, up to 15%297.57 pence
StillMore than 15%, up to 22%396.72 pence
SparklingMore than 5.5% but less than 8.5%288.10 pence
SparklingMore than 8.5%, up to 15%381.15 pence
Gov.uk

For instance, here is the step-by-step calculation of the excise duty on 120 cases of white wine each containing 6 bottles of 75cl, 14% abv.

First, it is better to convert beer duty rate per litre for each % of alcohol from hectolitres to centilitres.

Example

297.57/10000 = 0.029757 pence duty per cl.

For 75cl white wine bottle, the excise duty is

75 x 0.029757 = £2.23

Thus, the duty on 120 cases is:

120 x 6 x 2.23 = £1,606.87

Then on top of that duty, don’t forget you’ll pay an additional 20% VAT on the bottle price.

The more you pay, the better wine you get.

Frankly, when buying a £5.00 bottle of wine in the UK, only 31p pays for the wine itself. This is considerably less than the £2.70-worth of wine you get with a £10 bottle or the £7.03 with a £20 bottle.

So, the Bibendum graphic below shows that a bottle of wine costing £7.50 or £10 should mean that a higher proportion of the money is going into the winemaking, versus a bottle of wine at the £5 mark.

Spending a little more in-store or online will certainly bring you greater joy in your glass because the quality difference is likely to be enormous.

Not only do you get better quality for your money when you spend more, but this value also rises at a much faster rate with bottle price.

Credit: Bibendum

You pay duty on wine and made wine of more than 22% abv at the same rate as spirits.

Example

The Spirit Duty you pay on a 1 litre bottle of 40% abv vodka is 40% of £28.74, or £11.50.

Guide to calculating excise duty: Beer

Beer is calculated by converting the bulk litres into Hectolitres and multiplying by the abv figure declared. The current excise duty rate is then applied to this figure.

Example

You buy a pint of 5.0% strength lager.
The Beer Duty you pay is 19.08p x 5.0 = 95.40 pence per litre.
This works out at just over 54 pence a pint (about 568ml).

Strength (ABV)Rate per hectolitre per cent of alcohol in the beer
More than 1.2%, up to 2.8%£8.42
More than 2.8%, up to 7.5%£19.08
More than 7.5%£24.77
Gov.uk

To find the excise duty on 150 cases of Beer each containing 24 bottles of 33cl and 5% abv.

First, it is better to convert beer duty rate per litre for each % of alcohol from hectolitres to centilitres.

Example

19.08/10000 = 0.001908 pence duty per cl.

For 33cl beer bottle, the excise duty is

33 x 0.001908 x 5 = 31.48 pence

Thus, 150 x 24 x 31.48 = £1,133.35

is total excise duty payable for 150 cases of 24x33cl beer bottles.

What is EMCS System and e-AD?

Before January 2011, it used to be commonplace for alcoholic beverages which were being shipped to the UK, from another Member EC State, be accompanied by an AAD (Administrative Accompanying Document) Form, but this has since been updated into a digital format and computerised on the EMCS computer system.

If your goods are shipped from the EU, duty suspended, then your supplier will now need to register on the European-wide EMCS computer system, creating an e-AD record of the movement of your drinks, for each shipment.

ProtipEven though this is only a requirement to duty suspended drinks, UK Customs prefers that even those shipments which are ‘duty pre-paid’ to be entered onto the EMCS system.

Foodnomy is here to help

Excise duty must be paid on all alcoholic drinks before it can be released into Free Circulation for resale or any other commercial use. (The exception being when insignificant amounts are transported by an individual for personal consumption and is under the Personal Allowance limit).

To arrange for the Customs clearance, and payment of excise duty, you will need to employ the services of a REDS Agent (Registered Excise Dealers and Shippers). There are several about, and although your preferred agent may not be a REDS Agent themselves, they may have negotiated preferential rates, with an agent whom they use regularly, meaning that they too will be able to arrange the clearance for you.

Got any more questions? Get in contact with our team today and see how we can help you!

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