It’s gin o’clock for HMRC as Mother’s Ruin boosts the coffers

Not since the days of William Hogarth has Mother’s Ruin featured so prominently in the national consciousness. In the 21st century, gin is seriously big business as evidenced by the slew of pop-up bars and festivals devoted to this elixir of the gods as well as the number of bottles weighing down supermarket shelves. Just this week Sainbury’s launched two new gins aimed at connoisseurs while Lidl continues to sell inordinate amounts of its award-winning tipple. Now the juniper-flavoured favourite has reached another milestone. Figures from HM Revenue & Customs reveal that sales of gin have helped spirits overtake beer for the first time. The Treasury earned an extra £225 million in revenue from spirit drinkers last year thanks to a freeze in spirits duty in the 2016 Budget, taking its total spirits duty to nearly £3.38 billion. Beer duty was also frozen and led to a contribution of £3.32 billion. According to The Wine and Spirit Trade association (WSTA), sales of gin have soared by 12 per cent, the fastest growth rate of any spirit drink.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: ‘The WSTA dubbed 2016 the year of gin and the gin boom has had a large part to play in the windfall now being enjoyed by the Treasury. The 7 per cent increase on revenue takings came as a result of the Chancellor freezing spirit duty in 2016 and allowing the industry to grow and invest. It proves the point that cutting or freezing spirits duty brings rewards, which is why the inflation busting rise in duty this year was such a disappointment and threatens the industry’s ability to invest, grow and export.’

So you may want to hold off on cracking open that can of Fever Tree and slicing up a cucumber. As Beale points out, spirit makers are concerned about future sales after the Chancellor’s March Budget contained a 3.9 per cent rise on alcohol duty, adding another 30p to a bottle.

The UK’s high duty rates mean that UK consumers pay 25 per cent of all spirits duties collected by EU member states and an eye-watering 77 per cent of the average price of a bottle of gin is taken up in duty and VAT. That means that every time we buy an average priced 70cl bottle of spirits, at 40 per cent abv, £10.33 goes straight to the Treasury.

And let’s not forget wine which remains at the top of the Revenue’s booze table, cashing in more than £4 billion for revenue coffers during the last financial year. That’s a 5 per cent year-on-year rise in terms of alcohol tax revenue compared to 7 per cent for spirits and 1 per cent for beer.

All in all, the UK pays more in alcohol duty than Germany, France, Poland, Italy and Spain combined. It’s enough to make you turn to the bottle.

Helen Nugent is Online Money Editor of The Spectator