Land regulations

Converting farmland into vines should not be an issue, but smaller sites that have not been cultivated are protected by Environmental Impact Assessment (EIA) regulations. Changing the use of such land to viticulture will require permission from Natural England through an EIA screening decision.

All vineyards exceeding 0.1 hectares must be registered with Wine Standards within six months of planting. They will then be included in the UK Vineyards Register, produced by the Food Standards Agency.

Both European and UK wine laws are presently applicable, which are predominantly outlined in Regulation (EU) No 1308/2013 and The Wine Regulations 2011 SI No 2936. Note that planning regulations will also apply for any new build or building conversions and advice should be taken.

Tax and duty

Duty is applied as a flat rate on wines between 5.5% alcohol by volume (ABV) and 15% ABV, irrespective of price or quality. An additional 20% VAT applicable to the value of goods plus any duties and naturally increases with the number on the price tag. Wine duty has increased in line with inflation in 2019 amounting to a 3.1% rise.

For the cheapest (£5) bottles of wine, it costs only 16 pence to produce the wine. Unsurprisingly, merchants encourage spending double on the bottle to increase the quality of the wine by more than 18 times. As a proportion of the total value of a bottle, margins remain relatively flat. However, quality should still be sought as UK land yields less than its continental counterpart. A quality product will command a higher price.

While applied as a flat rate, duty does vary according to ABV and whether the wine is still or sparkling. Generally, more duty must be paid on sparkling varieties and with increasing alcoholic content. Wine duty has increased 28% since 2010 and was singled out in the Autumn Budget as the only alcoholic beverage not frozen at the present rate. If alcohol content exceeds 22% ABV duty must be paid at the same rate as spirits. Land used to grow grapes is now defined as agricultural land by HMRC. This means the value of the land might be up to 100 per cent free of inheritance tax as part of an estate.

Licensing

Wine can only be produced without a licence if it is not sold. Producing wine with more than 1.2% ABV needs a licence, as does turning still wine into sparkling. Commercial growers or lessees who sell wine still require a licence even if the wine production is handled by a third party.

A licence must be obtained for each site where wine will be produced to sell. Plans of the premises, the location of winemaking equipment on the premises and any identifiable markings on the equipment must also be sent with the application. Once obtained, a producer must keep records, calculate duty and make monthly returns and payments.

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