Another question about buying port in the U.K.
Another question about buying port in the U.K.
In the Netherlands when we buy a bottle of wine we pay 21% tax. That's it, no more, no less.
In the U.K. you use another system I believe. Could somebody please explain to me in very simple words the meaning or difference between VAT, sales tax, in bond and duty paid?
F.i. when I as a costumer would want to buy a bottle which costs 100 pounds, how much would I be paying for real?
Thank you and sorry for my maybe dumb question..
In the U.K. you use another system I believe. Could somebody please explain to me in very simple words the meaning or difference between VAT, sales tax, in bond and duty paid?
F.i. when I as a costumer would want to buy a bottle which costs 100 pounds, how much would I be paying for real?
Thank you and sorry for my maybe dumb question..
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- Dalva Golden White Colheita 1952
- Posts: 3707
- Joined: 17:45 Fri 19 Oct 2012
- Location: Somerset, UK
Re: Another question about buying port in the U.K.
I will answer this in the hope that others may be coaxed into correcting my errors.
Duty is a standard price per bottle of wine depending on the type of wine. There are 3 categories.
1) still wines below 16% alcohol by volume charged at £2.08 per bottle.
2) Sparkling wines £2.67 per bottle.
3) fortified wines (this is the number you will need to know) £2.78 per bottle*
*a bottle is a standard 75cl, a magnum would count as 2 bottles.
Wines can be traded in the UK without the Duty having to be paid while they are "in bond". This refers to a "bonded" storage which customers do not have direct access to. In order for the wine to be released from bond to UK customers the Duty has to be paid.
When it is released from "bond" it becomes subject to VAT (value added tax) which is currently 20%. This must be paid not only on the price of the bottle but also on the Duty.
So the question you asked about the £100 bottle of port is £100+£2.78=£102.78
Then add the VAT at 20% £102.78+£20.56=£123.34 in total.
Wine websites in the UK often show prices exclusive of Duty and VAT, but some have a function of selecting "retail" prices which include Duty and VAT.
To add further confusion I think it is possible to export wines "in bond" without paying any UK Duty or VAT, however you may then be liable for whatever taxes you would normally pay in the Netherlands. But this would mean you could not get your friend in London to buy the wine as they would need to pay Duty and VAT to get it from a shop.
I hope this makes sense. I am too weak to read it all through again.
Duty is a standard price per bottle of wine depending on the type of wine. There are 3 categories.
1) still wines below 16% alcohol by volume charged at £2.08 per bottle.
2) Sparkling wines £2.67 per bottle.
3) fortified wines (this is the number you will need to know) £2.78 per bottle*
*a bottle is a standard 75cl, a magnum would count as 2 bottles.
Wines can be traded in the UK without the Duty having to be paid while they are "in bond". This refers to a "bonded" storage which customers do not have direct access to. In order for the wine to be released from bond to UK customers the Duty has to be paid.
When it is released from "bond" it becomes subject to VAT (value added tax) which is currently 20%. This must be paid not only on the price of the bottle but also on the Duty.
So the question you asked about the £100 bottle of port is £100+£2.78=£102.78
Then add the VAT at 20% £102.78+£20.56=£123.34 in total.
Wine websites in the UK often show prices exclusive of Duty and VAT, but some have a function of selecting "retail" prices which include Duty and VAT.
To add further confusion I think it is possible to export wines "in bond" without paying any UK Duty or VAT, however you may then be liable for whatever taxes you would normally pay in the Netherlands. But this would mean you could not get your friend in London to buy the wine as they would need to pay Duty and VAT to get it from a shop.
I hope this makes sense. I am too weak to read it all through again.
Re: Another question about buying port in the U.K.
Thank you very very much, this makes perfectly sense! I even didn't had to look on a translation site to understand all of it!
Here in the NL I would have been paying 121 euro, so I have to add a little more on the U.K. prices when I look for it. But than again the U.K. prices are way better than the NL/Belgium/German/etc prices.
Thank you again for your clear explanation, it helps me a lot!
Here in the NL I would have been paying 121 euro, so I have to add a little more on the U.K. prices when I look for it. But than again the U.K. prices are way better than the NL/Belgium/German/etc prices.
Thank you again for your clear explanation, it helps me a lot!
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- Dalva Golden White Colheita 1952
- Posts: 3513
- Joined: 14:22 Wed 15 Dec 2010
- Location: Near Cambridge, UK
Re: Another question about buying port in the U.K.
Hi Monique; the only addition to Owen's description is to note that many retailers hold stock which is not in-bond, but quote ex-vat prices (e.g. common on wine-searcher) to which your friend would only have to add VAT when paying. Thus:
- if "in-bond", add duty and VAT
- if "ex-VAT", add VAT
The latter is common for businesses buying anything in the UK, so is commonly seen; the former is only related to imported wine.
- if "in-bond", add duty and VAT
- if "ex-VAT", add VAT
The latter is common for businesses buying anything in the UK, so is commonly seen; the former is only related to imported wine.
- Alex Bridgeman
- Graham’s 1948
- Posts: 14906
- Joined: 13:41 Mon 25 Jun 2007
- Location: Berkshire, UK
Re: Another question about buying port in the U.K.
One of the nice things about buying port or wine in the UK is that you can buy "in bond" and then store "in bond" until you actually want to drink the wine.
So you could buy a case of port today, in bond, for £235 (which was the Corney & Barrow initial release price for 6 bottles of Taylor 2011). If you pay the duties and taxes immediately, this costs you £235 + 6 x 2.78 + 20% VAT = £302.09.
You then have to store the wine for 20 years to allow it to mature. You might be lucky enough to have a cellar at home where storage is free, but you might have to do like I do and store your wine at Seckfords. Seckfords charge me £4.50 per year for each box of 6 bottles I store, or £90 for the 20 years.
Alternatively you could store the port with Seckfords "under bond" and delay paying the duties and taxes until you actually want to drink the port. The duty and taxes you pay will be the rate at the time you take delivery but the value of the wine is the value you actually paid when you first bought it. So you might find in 20 years you will be paying £235 + 6 x 11.12 + 21% VAT = £365.08 - £235 (you paid for the wine 20 years ago) = £130 but by then inflation and wage increases will mean that £130 in 20 years time is about the same as paying £35 would be today.
Does this make sense?
So you could buy a case of port today, in bond, for £235 (which was the Corney & Barrow initial release price for 6 bottles of Taylor 2011). If you pay the duties and taxes immediately, this costs you £235 + 6 x 2.78 + 20% VAT = £302.09.
You then have to store the wine for 20 years to allow it to mature. You might be lucky enough to have a cellar at home where storage is free, but you might have to do like I do and store your wine at Seckfords. Seckfords charge me £4.50 per year for each box of 6 bottles I store, or £90 for the 20 years.
Alternatively you could store the port with Seckfords "under bond" and delay paying the duties and taxes until you actually want to drink the port. The duty and taxes you pay will be the rate at the time you take delivery but the value of the wine is the value you actually paid when you first bought it. So you might find in 20 years you will be paying £235 + 6 x 11.12 + 21% VAT = £365.08 - £235 (you paid for the wine 20 years ago) = £130 but by then inflation and wage increases will mean that £130 in 20 years time is about the same as paying £35 would be today.
Does this make sense?
Top Ports in 2023: Taylor 1896 Colheita, b. 2021. A perfect Port.
2024: Niepoort 1900 Colheita, b.1971. A near perfect Port.
2024: Niepoort 1900 Colheita, b.1971. A near perfect Port.
Re: Another question about buying port in the U.K.
Thank you gentlemen, It's very clear to me.
As I do have the luxury of having a large cellar underneath my house, buying in bond won't be necessary. I would like to buy the bottles and store them into my own cellar.
I'm having a short break, so I'll be going to explore the internet the next few weeks, so be prepared for lots of questions
Thanks again, Monique
As I do have the luxury of having a large cellar underneath my house, buying in bond won't be necessary. I would like to buy the bottles and store them into my own cellar.
I'm having a short break, so I'll be going to explore the internet the next few weeks, so be prepared for lots of questions
Thanks again, Monique
- RonnieRoots
- Fonseca 1980
- Posts: 1981
- Joined: 08:28 Thu 21 Jun 2007
- Location: Middle Earth
Re: Another question about buying port in the U.K.
I've always found that a major advantage of keeping Duty separate from the price, is that it's immediately clear how much you pay on duty. There is duty on alcohol in the Netherlands too, but it is usually paid by the importers who then integrate it in their wholesale price to retailers. They apply their margin on the total amount, which creates an unnecessary inflation on the retail price and leaves the consumer paying more than they actually should.
I struggled with this when I was still importing myself and it still strikes me as unfair.
I struggled with this when I was still importing myself and it still strikes me as unfair.
Re: Another question about buying port in the U.K.
I didn't know that, could this be one of the reasons why the prices on the mainland are much higher than in the U.K?RonnieRoots wrote:I've always found that a major advantage of keeping Duty separate from the price, is that it's immediately clear how much you pay on duty. There is duty on alcohol in the Netherlands too, but it is usually paid by the importers who then integrate it in their wholesale price to retailers. They apply their margin on the total amount, which creates an unnecessary inflation on the retail price and leaves the consumer paying more than they actually should.
I struggled with this when I was still importing myself and it still strikes me as unfair.
Re: Another question about buying port in the U.K.
It may also be worth considering buying port at auction, although I am uncertain as to the issue of duty to be paid in the Netherlands. Typically, wine at auctions carries a buyers premium including VAT of a little less than 20%, but the wines are duty paid. Often the prices are attractive, although there is a question of provenance.
Alternatively, buying volume in bond in the UK from a reputable merchant - such as Seckford, shipping to the Netherlands, and paying the Dutch duties could be a good way to go. Typically, the people handling storage at any professional cellarer will be able to put you in touch with a reputable wine transport company.
Alternatively, buying volume in bond in the UK from a reputable merchant - such as Seckford, shipping to the Netherlands, and paying the Dutch duties could be a good way to go. Typically, the people handling storage at any professional cellarer will be able to put you in touch with a reputable wine transport company.
- RonnieRoots
- Fonseca 1980
- Posts: 1981
- Joined: 08:28 Thu 21 Jun 2007
- Location: Middle Earth
Re: Another question about buying port in the U.K.
Well, it'll be part of the reason, but duty rates in the Netherlands are lower than in the UK, so it won't be the whole explanation. I'm guessing that the sheer difference in volume will make a bigger difference. The UK has traditionally been a large market for VP, whereas sales in the Netherlands are fractional. Also, importers have a large role in setting the price. The Dutch importers of the major port shippers have a tradition of commanding high margins, demand exclusivity and don't sell directly to consumers. A recipe for inflated prices, and a model that's hopelessly outdated in modern times where all savvy consumers check prices through winesearcher and the likes.Monique wrote:I didn't know that, could this be one of the reasons why the prices on the mainland are much higher than in the U.K?RonnieRoots wrote:I've always found that a major advantage of keeping Duty separate from the price, is that it's immediately clear how much you pay on duty. There is duty on alcohol in the Netherlands too, but it is usually paid by the importers who then integrate it in their wholesale price to retailers. They apply their margin on the total amount, which creates an unnecessary inflation on the retail price and leaves the consumer paying more than they actually should.
I struggled with this when I was still importing myself and it still strikes me as unfair.