What most people don’t realise when they buy a bottle of wine for under £5 in the UK is that over half the price goes on tax. Between the fixed rate duty and the cost of VAT very little of the price is left to actually cover the substantial cost of the wine inside.
Based on an average bottle price of £5.03 more than half goes straight in to the tax mans pocket. A £2 fixed duty (one of many so called sin taxes) plus the 20% VAT means that when you calculate the total tax only £2.19 is left to cover
- Growing the grapes
- Producing the wine
- Storing the wine
- the bottle
- Distributor profits
The consequence is that here in Britain wine drinkers buying a wine at less than a fiver are actually spending less than £2. A harsh and unfortunate truth that wine drinkers in other parts of the world don’t need to worry about. For those interested there is a simple wine tax calculator available over at Cellar Exchange. You might find this infographic courtesy of Charlie the Wine useful.
Essentially if you fancy a £5 wine you need to spend at least £8.40!