If you grow grapes, make wine or move it around the UK, you may have already felt it: Alcohol Duty increased by 3.66% (in line with RPI) from 1 February 2026. HMRC also uprated Small Producer Relief (SPR) to keep its value, however, SPR only applies to drinks below 8.5% ABV, so it won’t usually help with standard‑strength wine.
Why this bites faster than you think
Alcohol Duty is charged when alcohol is produced or imported, and then VAT is charged on top of the duty‑inclusive price. That “tax‑on‑tax” effect means a headline duty rise can magnify through your pricing and cash flow. If your 2026 plan assumed a freeze, expect tighter margins unless you revisit pricing or contract terms.
What can you do?
Whether you run your own vineyard or winery, or you’re involved in producing, importing, or distributing wine, there are several practical steps you can take today to stay in control and keep your business growing in the right direction. With the right approach, you can help ensure your operation continues to flourish on the vine.
Protect the profit you make on each bottle
It’s important to review your product pricing and understand which bottles generate the strongest margins for your business. By revisiting your pricing structure and the mix of products you sell, you can see where rising alcohol duty may have the biggest impact.
You may also want to adjust the timing of any price changes to align with the alcohol duty changes which can help avoid sudden increases that might unsettle your trade customers, such as retailers, wholesalers or restaurants.
Make the impact of duty increases clear in your contracts
It’s important to check whether your current supply agreements and any contracts for private‑label products allow you to automatically pass alcohol duty increases on to your customers. Some contracts include this protection, but others may not, or they may place limits on how much can be passed through. If your agreements do not give you this flexibility, we can help you negotiate with third parties or update the wording in your contract to include a “duty escalator” clause or introduce price bands linked to an index.
Manage cash flow pressures
Higher alcohol duty can affect the timing of your cash flow. To manage this, you may want to review payment terms with customers and suppliers, plan drawdowns of finance more carefully or use excise warehouses to delay when duty becomes payable. These steps can help smooth out cash‑flow peaks and troughs, improving predictability and reducing strain on the business.
Make duty‑related price changes automatic in retailer agreements
When HMRC raises duty, you want your prices to adjust smoothly rather than leaving you to renegotiate with retailers each time. We can assist you by including a “change in law” clause in your contracts which should allow your prices to update automatically when duty increases occur.
Talk to lenders early
If your current loan or finance arrangements were structured on pre‑uplift EBITDA, the lenders may have assessed affordability using older financial figures. It is important to check whether you are still meeting the required financial tests, such as how easily you can cover interest payments or how your debt compares to your current earnings. If your margins have become tighter, and you think there might be a risk that you are not complying with you borrowing terms, it would be a good idea to approach the lender to request short‑term flexibility which may include temporary waivers or adjusting the financial tests so they better reflect your business’s current position.
Our experienced viticulture team can assist with all aspects of the above and please do get in touch if you have any questions.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2026.