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Telegraph christmas Wine quiz

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AMOR66 | 19:02 Sat 08th Jan 2011 | Quizzes & Puzzles
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Hi I am still working on this one. I am having trouble with Question 5. VAT goes up to 20 per cent on January 4. After this, how much tax (duty plus VAT) will you pay on a 14% bottle of table wine costing £5? I searched but could not find this already on the site.
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According to the HMRC website, the rate of duty on still table wine ABV 5.5% to 15% is £225 per 100l. Assuming the bottle of wine is 75cl this would give duty of £1.69 (0.75 * 2.25).

The nett price of a £5 bottle of wine at 17.5% would be 5/1.175 = £4.26. VAT at 20% on £4.26 would be £0.85.

So the duty + VAT would be £1.69 + £0.85 = £2.54.
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Thank you very much for your comprehensive answer and explanation.
You're welcome - I hope I've got the maths right!
Hmmm. On second thoughts, if the wine still costs £5 after 4 January, then the nett price would be £4.17 (5/1.2) giving VAT of £0.83. So the tax + duty would be £0.83 + £1.69 giving £2.52.

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