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The Price of Wine Explained
A recent statistic shows, the more you spend on wine the better quality you shall get. Sounds obvious, right?
As an example, buying a bottle of wine in the UK that costs £5.39 (the UK average) will mean that the actual liquid in the bottle has a value of a whopping 60 pence. This is due to the costs of packaging, logistics, VAT, total margin and the recently increased cost of excise duty inflating. The recent announcement from chancellor Philip Hammond, declared duty rises in line with inflation, set the wine industry abuzz. But what does this all mean for wine drinkers in the UK?
The past decade has seen bad news for wine lovers every time there is a duty rise, with successive tax increases under different governments - but what is Duty, and what does it mean to have wines that are Duty Paid or In Bond? We have outlined a brief explanation below:
Each month, HMRC publish an alcohol duties bulletin which shows totals clearances of alcohol in the UK. Clearances represent the total amount of alcohol which is 'released for consumption' on which tax (UK excise duty) has been paid.
Taxation – How much is UK Wine Excise Duty?
£2.16 per 75cl bottle of still wine.
£2.77 per 75cl bottle of sparkling wine.
£2.89 per 75cl bottle of Port wine
UK VAT = 20% (applied after duty)
VAT is charged on the total of the value of the goods plus all duty.
All this means that 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.
About Buying Wines In Bond (IB)
Wines in bond (IB) have not yet had the Duty and VAT paid on them. They must be stored in a bonded warehouse approved by HM Customs & Excise.
i.e. in Bond purchases exclude Duty and VAT. If/when you choose to have the wines delivered (anywhere in the EU) these taxes become payable (at UK rates).
Most of our Fine Wines are available for purchase under bond, as they often need to be laid down in order to allow them to mature. Many clients choose therefore to store them in our bonded warehouse under a personal account and pay the tax as and when they wish to get the wines delivered.
What are the advantages of buying In Bond?
- The Duty and VAT is deferred. Should you choose to sell the wine on (in bond) at a later date, you will never pay Duty and VAT.
- If you choose to have the wine delivered at a later date, the VAT is payable on the originalsale price of the wine, NOT its current market value.
- Wines stored in bond are much more attractive to prospective buyers and brokers. Merchants or brokers will usually give you the same price whether or not the wine is duty and VAT paid.
- Traceability and Provenance - wines stored in bond are much easier to trace (there are a limited number of bonded warehouses). Therefore, there is a better chance that wines have been stored correctly
Published on: March 20, 2017