UK Reform of Alcohol Duty Rates (Aug 2023)
Guidance on the Aug 2023 UK alcohol duty rate reform and its impact in Bevica.
The UK government are introducing changes to the duty structure for alcohol excise duty, planned to take effect from 1 August 2023. The temporary easement for certain wine products will also take effect from 1 August 2023 and will run for 18 months, until 1 February 2025.
• New UK duty rates for 1st February 2025
Update (16/07/2024) End of Easement, 31 January 2025.
• See End of Easement section
Amendment (13/07/2023)
• Some rates have changed, see https://www.gov.uk/guidance/work-out-how-much-alcohol-duty-you-need-to-pay for the latest and full list. New Rates table update below too.
Amendment (21/06/2023)
• Addition of a predefined configuration package for Bevica SaaS.
Amendment (15/06/2023)
• Corrected 'WSBC-21.9' rate to £28.50.
• Our suggestion for the Interim rate 'WINT-14.5' has been changed from £324.00 to £356.25. This is accurate when calculating duty on larger volumes.
New scheme
After a period of alcohol duty rate stability, the Government has announced a sizeable change to how duty on alcohol is calculated. In an attempt to simplify duty rates there is an underlying view that the higher the ABV the higher the duty burden on the product. There is no longer a distinction in rate between types of wine product (e.g. sparkling and fortified wines are considered as wine and spirits), the distinction is now by ABV, so 22% products attract more excise duty.
There are a few exceptions:
Some beer (please check HMRC directly on how to manage beer if this is applicable to you, as there is duty relief on some beer).
Still wine between 11.5-14.5% ABV there is a ‘temporary relief’ period, lasting for 18 months, until 1st February 2025. The rate will be based on an equivalent rate of 12.5%, this equates to a HL rate or £356.25. See also End of Easement at the end of this article.
Please also check directly for alcohol products lower than 1.3% if applicable to you.
Useful links
Alcohol duty rate changes (published 07/07/23) - GOV.UK (www.gov.uk)
Reform of alcohol duty rates and reliefs (published 23/03/2023) - GOV.UK (www.gov.uk)
Changes to alcohol duty rates (published 15/03/2023) - GOV.UK (www.gov.uk)
New Rates
We recommend creating the following new duty codes/rates. The codes are a suggestion you can create your own.
WSBC-3.4
Wine, Spirits, Beer & Cider 1.3% - 3.4% ABV
L%Alc
£8.42
£9.27
WS-8.4
Wine & Spirits 3.5% - 8.4% ABV
L%Alc
£22.50
£24.77
WSBC-21.9
Wine, Spirits, Beer & Cider 8.5% - 21.9% ABV
L%Alc
£28.50
£28.50
WSBC22+
Wine, Spirits, Beer & Cider 22%+ ABV
L%Alc
£28.74
£31.64
WINT-14.5
Wine, interim 11.5% - 14.5% ABV
HL
£356.25*
£356.25*
Beer-8.4
Beer 3.5% - 8.4% ABV
L%Alc
£19.08
£21.01
Cider-8.4
Cider 3.5% - 8.4% ABV
L%Alc
£8.87
£9.67
this is equivalent to £28.50 / L%ABV rate @ 12.5%.
There is not always a one-to-one mapping old rate to new rate, worked examples here:
Sparkling wine
Prosecco at 11% ABV maps to WSBC 8.5% - 22% rate.
Champagne at 12.5% ABV maps to Wine Interim rate.
Still wines
Riesling at 8.5% ABV maps to WSBC 8.5-22 rate.
Riesling at 13% ABV maps to Wine Interim rate.
Considerations
Changing to the new rates will potentially have knock-on impacts, we suggest checking these:
Test/practice the changes you need to make to items and duty rates in advance.
Confirm the correct duty amount is being recorded by the system on movements from Duty Free to Duty Paid.
Understand the impact the new duty rates will have on your sales prices / discounts.
Where duty is added/removed to reach the sales price on a sales document, it uses the item's current duty code and the sales document's 'Document Date'.
You may want a process for confirming ABV% on new items.
Action
The action differs slightly if you are On-premise or SaaS.
On-premise
The current software is able to calculate duty amounts in both HL and L%Alc, so no functionality updates are required.
The suggested approach is to prepare any changes you need to make to items and duty rates in advance and on 31/07/23 make the changes so that they apply correctly from 01/08/2023 onwards.
Items may need to have their Duty Code (alternatively called 'FIS Code', 'Excise Duty Code', 'Fiscal Code' in different systems) changed. Where necessary create the new Duty Rate record with a new Code, assigning Start Date to 01/08/2023, Units = L%ALV and the appropriate £ Rate. If you have any other bespoke fields on this page make sure that are also populated.
Where you can use an existing rate, create a new duty rate record for the existing code, populating other fields as above.
Rapid Start Configuration packages can be used to change Item Duty rates in bulk. We suggest creating a Configuration Package based on Table 27 with the following fields:
No.
Unique reference
Description
For information to help visually validate the changes you are making.
Base Unit of Measure
For information to help visually validate the changes you are making.
Unit Volume
For information to help visually validate the changes you are making.
% Alcohol
For information to help visually validate the changes you are making.
Duty Rate
The field to be amended.
SaaS
The current software is able to calculate duty amounts in both HL and L%Alc, so no functionality updates are required.
The suggested approach is to prepare any changes you need to make to items and duty rates in advance and on 31/07/23 make the changes so that they apply correctly from 01/08/2023 onwards.
You will need to create new Duty Codes. Navigate to the Duty Codes page, create a new record and set the Units field to L%Alc. For each Code select Rates from the page ribbon and create a new line with the appropriate Duty Unit Cost (LCY) and starting date 01/08/2023.
A Rapid Start Configuration package can be used to change Item Duty rates in bulk. You can download a Configuration Package B-DM-ITEM DUTY with the following fields to import into your test and then production environments.
1
No.
Yes
Code 20
3
Description
Text 100
For information to help visually validate the changes you are making.
8
Base Unit of Measure
204 Unit of Measure
Code 20
For information to help visually validate the changes you are making.
44
Unit Volume
Decimal
For information to help visually validate the changes you are making.
70511
TVT Alc % Vol.
Decimal
70504
TVT Duty Code
70513 TVT Duty
Code 20
Populate this column with each item's new duty code.
If you see the message 'Duty Entries exist for this item' when applying your changes please upgrade to the latest version of Bevica.
End of Easement
As of the 1st February 2025 the special flat rate for all wines between 11.5% and 14.5% ABV will come to an end.
'Wine between 11.5% and 14.5% ABV will be treated as if it is 12.5% ABV for the purposes of calculating the charge to Alcohol Duty from 1 August 2023 until 1 February 2025.'
Going forward duty on these wines will be calculated on their specific %ABV.
Action
Make sure the %Alc. is accurate on these wines.
All wines in this band will need to have their Duty Code changed to one that reflects 'duty on all alcoholic products at least 8.5% but not exceeding 22% ABV: £29.54 per litre of alcohol in the product'.
No functionality updates are required for either SaaS or On Prem systems.
WSBC-21.9
Wine, Spirits, Beer & Cider 8.5% - 21.9% ABV
L%Alc
£29.54
On-premise / SaaS
The suggested approach is to identify the current items set to the easement code, WINT-14.5 (in our examples), and change them to WSBC-21.9 on 31/01/2025, or at least before the first Duty Free to Duty Paid movement from 1st February 2025. The B-DM-ITEM DUTY configuration package can be used to achieve this.
On Premise clients can, alternatively, create a new Duty line, with the same Code as the current easement items, set to start on 01/02/2025 with L%Alc. @ £29.54. In this scenario there is no need to change the duty code on the easement items.
SaaS Pricing - New Price Experience
If you are on SaaS and running the new price experience 'Price Lists' you will need to recalculate Price List prices to take into account the new duty rates.
For each Price List that is set to Auto-Create Duty Price, after amending the duty codes/rates and applying them to items, you need to Set the Price List status to Draft then back to Active for the new duty amount to be incorporated in the alternate Duty price.
UK 2024 Autumn Budget
The end of easement was confirmed for end of January 2025 with new duty rates announced from that date, for details see here: UK HMRC. Changes to the rates of alcohol duty (published 30/10/2024). The new rates need to be applied to your duty rates with starting date 1st February 2025.
Please let us know if you have any queries.
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