Duty falls due the day it leaves the warehouse. Not before.
While the spirit is in bond it is in duty suspension and you owe nobody anything. The moment it is released for consumption, UK excise duty is charged on every litre of pure alcohol in it, and VAT is charged on top of that. Neither is ours, neither is optional, and neither is included in the price of the cask.
How UK alcohol duty is charged.
Since 1 August 2023 UK alcohol duty has been charged by strength, on the litres of pure alcohol in the product rather than on the volume of liquid. The structure comes from Part 2 of the Finance (No. 2) Act 2023.
Anything above 22% ABV sits in the top band and pays a single rate per litre of pure alcohol. From 1 February 2025 that rate is £32.79. It is uprated most years, usually in February, and the rate that applies to your cask is the one in force on the day the spirit leaves the warehouse — not the day you bought it, and not the day it was filled.
The duty point itself is set by the Excise Goods (Holding, Movement and Duty Point) Regulations 2010: duty becomes payable when excise goods are released for consumption, which for a cask in bond means the day it is removed from the warehouse.
VAT at 20% is then charged on the value of the goods including the duty. VAT on duty is a tax on a tax, everybody finds it irritating, and it is nonetheless correct.
A worked example: the barrel.
| Line | Working | Amount |
|---|---|---|
| Cask price, paid at purchase | Fixed on the day | £3,400.00 |
| Expected regauge | 159.4 litres at 56.5% ABV | 90.0 LPA |
| Reduced and bottled | ≈280 bottles, 700ml at 46% ABV | 90.0 LPA |
| Excise duty | 90.0 LPA × £32.79 | £2,951.10 |
| Duty per bottle | 0.322 LPA × £32.79 | £10.56 |
| VAT on duty and bottling | 20% on the released value | On the invoice |
| Total further payable | Duty plus VAT, on the day it leaves bond | ≈£3,900 |
| Total, all in | Cask plus duty plus VAT, across eight years | ≈£7,300 |
| Which is | ≈£7,300 for ≈280 bottles | ≈£26 a bottle |
The other tax questions, answered plainly.
While it is in bond
- Excise duty
- Nothing payableDuty suspension
- VAT
- Nothing payable on the spirit
- Storage and insurance
- Included in the cask price
- Annual charges
- None. There is no yearly bill of any kind
When it comes out
- Excise duty
- £32.79 per litre of pure alcoholRate as at 1 February 2025, above 22% ABV
- VAT
- 20%, on goods including duty
- Who pays
- YouWe collect it and remit it; we cannot waive it
- When
- On release from the warehouse, not on the anniversary
Afterwards
- Selling the bottles on
- Requires HMRC approval under the Alcohol Wholesaler Registration SchemeWhich is a serious undertaking, not a formality
- Giving them away
- Fine, and much more in the spirit of the thing
- Taking them abroad
- UK duty is relieved on export, and the destination country will want its ownAssume it costs more, not less
- Capital gains
- Ask an accountantWe are a farm, and this page is not tax advice
Three things people get wrong about cask duty.
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"The price includes the duty"
It does not, anywhere in this industry, and an operator who implies it does is either confused or hoping you are. Duty is charged at the rate in force on the day of release and cannot be pre-paid years in advance.
The number on the cask page is the cask. The duty is a separate bill at the end and it is a large one.
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"I can avoid it by leaving it in bond"
You can defer it indefinitely, which is genuinely useful, but you cannot drink whisky that is still in a warehouse. The duty is the price of turning the cask into bottles.
Deferring it also means deferring into whatever the rate is by then, and the rate has gone up in most recent years.
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"The angel’s share saves me duty"
This one is true and it is the only consolation on the page. Duty is charged on the alcohol that actually leaves the warehouse, so the forty litres of a barrel that evaporated are never taxed.
You still paid for them. You simply do not pay duty on them as well, which is a small mercy and about the size of it.
You are not taxed on what the angels took. You are merely out of pocket.
This is not tax advice
This page describes how UK excise duty and VAT work on spirits in an excise warehouse, in plain English, on a demonstration build. Rates change, usually in February. Your own position may differ, particularly if you are outside the UK or buying through a company. Check the current rate with HMRC and take advice if the sums are large.
The questions duty gets.
No. It falls due in full on release from the warehouse. What you can do is release the cask in stages, paying duty on each part as it is bottled, which several people do.
Then you pay the higher rate, because the duty point is the day of release. It has gone up in most recent years and it would be dishonest to plan on anything else.
Small Producer Relief exists but only applies below 8.5% ABV. It does nothing at all for spirits, and anybody telling you otherwise is selling something.
Because VAT is charged on the value of the supply, and duty forms part of that value. It is correct, it is universal, and it is still annoying.
And if the cask turns out to be bad.
Some do. The policy is written down before you pay rather than negotiated afterwards.
