When a Scot thinks of whisky, ones mind could easily stray and cast up images of hills, heather, babbling brooks and burns, lochs, salmon rivers, stags in season, haggis, castles and bagpipes, but there is much more to whisky that this. Whisky is one of the biggest economic commodities that Scotland has, unfortunately the billions of revenues taken from the industry in tax goes to the Treasury in London rather than staying in Scotland, but what do we know about Scotland’s national drink? Well hopefully the following pages which have been researched will help enlighten you in to some of the dark secrets behind the history, the taxes and excises the two different kinds of whisky and how it is made and more.


The origins of malt whisky distilling in Scotland are lost in the mists of antiquity. They date back at least to the monks of the 15TH century, it could have been long before this, but there is no evidence to substantiate this.
The word - 'whisky' - derives from uisge, which is an abbreviation of uisge beatha, the Scots Gaelic for 'Water of Life'. It was first used in the 18th century. Prior to that writers referred to usquebaugh or aqua vitae (the Latin for 'Water of Life').
It´s not exactly clear when the first Scotch Whisky was actually de-stilled, but we do know that it was in the times of the ancient Celtic tribes that "uisge beatha", the water of life, was produced. Scots lay claim to the earliest recorded history of distilling in the world with the earliest Scottish record - in the Royal Exchequer Rolls of 1494 - where there is an entry of sale of ‘eight bolls of malt approx 1220kgs (2690 lbs) of malt to one Friar John Corr 'wherewith to make aqua vitae'. A boll was an old Scottish measure of between 5 and 6 six bushels. (One bushel is equivalent to 25.4 kgs)
Distilling was first considered to have been done in monasteries for medical purposes. There are suggestions it could have been Christian missionary monks who had brought the idea over from Ireland, showing how it could be de-stilled and used as a medicinal drink. There is no proof to support this, only some Irish records remark on how this might have been the case in the late 1100s. With this in mind it must have had what seemed to have healing qualities hence being given the name ‘The Water of Life’
Over the centuries, the Scots have perfected the art of distilling, using elements so abundantly provided for them by nature - barley and the peaty water of their burns flowing down from the hills and mountains. No wonder that, throughout the centuries, whisky has become an essential part of Scotland´s history, traditions and culture.
Malt whisky distilling was an extension of the farming year, part of the natural cycle of the seasons. The season began in August or September, when the barley had been taken in, and continued through the winter until late April. In May and June many distillery workers helped to cut peats for next season, but production ceased for the summer and maintenance work was done. Today, the length of the summer 'silent season' depends on demand.
Productions in centuries past were on a very small scale by farmers, monasteries and privately at home. All whisky at this point was made from germinated barley, which was dried over a peat fire making the mixture of barley and water "malted". The more peaty water could be used the stronger was the smell of the whisky capturing the aromas of the vast peat bogs that existed throughout the Highlands and islands. Therefore the Lowland malt whiskies were and are generally lighter than their Highland counterparts and more uniform in flavour. It was drunk at home much like we enjoy tea or coffee today - three times a day, and was considered medicinal as much as anything else. It was believed to preserve health, prolong life, and relieve colic, palsy, and smallpox.
1498 Lord High Treasurer's Account 'To the barbour that brocht aqua vitae to the King in Dundee'

In 1505 the Guild of Surgeon Barbers in Edinburgh was granted a monopoly in that town for the distillation of aqua vitae. When King James IV was in Inverness during September 1506, his Treasurer’s Accounts had entries for the 15th and 17th of the month respectively: ‘For aqua vite to the King. . .’ and ‘For ane flacat of aqua vite to the King. .‘lt is probable that the aquavitae in this case was spirit for drinking.

There is also a reference to distilling in a private house in the parish of Gamrie in Banffshire in 1614. This occurs in the Register of the Privy Council, where a man accused of the crime of breaking into a private house, combined with assault, was said to have knocked over some ‘aquavitie’.

1618 One of the earliest reference to 'uisge' being drunk at Highland chief's funeral John Taylor in his Pennyless Pilgrimage visits Earl of Mar and drinks aqua vitae

An unpublished letter of February 1622, written by Sir Duncan Campbell of Glenorchy to the Earl of Mar, reported that certain officers sent to Glenorchy by the King had been given the best entertainment that the season and the country allowed. It stated: ‘For they wantit not wine nor aquavite.’ This ‘aquavite’ was no doubt locally distilled whisky.

Another writer affirms that aquavitae occasionally formed part of the rent paid for Highland farms, at any rate in Perthshire, but no actual date is given for this practice.

11 February 1824 the death of Peter Grant ‘The Dubrach’ thought to be the auldest surving Jacobite of the 45 uprising aged of 110. At his funeral in Braemar where there were over 300 in attendance it is said that an Anker of whisky was consumed before the coffin had even been lifted, while a piper played at the grave side the tune’ Fa Windna Fecht for Charlie’. An Anker of whisky being about 4 gallons.
1941 Whisky Galore! - The Story This true story, which took place off the coast of the tiny island of Eriskay at the start of the second world war, has created a myth that endures to this day. A ship, the SS Politician, sank off the Scottish Island of Eriskay in 1941. The local islanders wasted no time rescuing much of its cargo - around 7,000 cases of Scotch Whisky, which they put aside for future use.
Eight years later the film Whisky Galore recounted the story of how the locals salvaged and successfully hid the bottles from government officials. Dozens of small boats from every nearby island hurried to the wreck, rescuing some 7,000 cases from a watery end. The 50,000 cases of Scotch aboard had been destined for the United States.
As it was wartime, whisky was in short supply and held a special place in the lives of the islanders. The decision was taken that the whisky must be saved at all costs. Government officials never discovered how much had been illegally salvaged, but not surprisingly there was no shortage of the precious drink on the islands for the remainder of the war.

Islanders use whisky instead of petrol
Monday, August 11, 2008
• Scottish islanders reveal scheme
• Cars do run on alcoholic drink
• But needs tax loophole to save money

Scottish islanders are planning to beat high fuel prices by filling their cars up on whisky.
The idea was sparked after petrol and diesel prices hit 128p and 145p respectively on the Inner Hebrides island of Islay.
As a result, Donnie MacKinnon 66 and friends Roland Worthington-Eyre and George Middleton decided they would exploit a legal loophole that allows people to distil whisky for personal consumption without paying tax.
Teetotaller MacKinnon was seen tipping a full gallon of Lagavullan whiskey into his 6 litre fuel tank of his 1978 Rolls-Royce 'Anything to try and cut the cost of running your car is worth it”. We’re experimenting at the moment. It’s far from perfected but we’re working on it.' When Mackinnon started the motor, thick smoke poured from the exhaust and the engine rumbled, but the vintage motor went on smoothly.
“ Anything to try and cut the running cost of your car is worth it”, the Sun quoted him saying.
"I've got a 1936 Armstrong Siddeley in the garage that I'm going to try next.
"Vintage whisky seems to work best on older cars. I put nothing but the best in mine," he said.
However, fuel prices will have to rise considerably before the plan makes economic sense. A 50-gallon barrel of whisky costs over £2000 before tax. A similar amount of petrol would be around £300.
But Middleton 54, says the key to the plan is being allowed to home brew whisky for personal consumption.
He said: 'We know whisky makes cars go. The question now is will we be allowed to distil our own — and instead of drinking it, just pour it into our vehicles.
'It’s all about cost, but with the way things are going whisky may end up being cheaper than petrol.
'Islay gives a lot to the Exchequer every year and we get very little back in return. Surely the Chancellor could grant us some leeway to develop whisky fuel.'
As per the law on the island, people are allowed to distil whisky for personal consumption without paying tax.
“We are known as Whisky Island with seven working distilleries” the undertaker, the game keeper stated.
“ If our idea can be refined properly we could have everyone here running cars on it” he added.
Worthington- Eyre had filled up his 1970 Morris Traveller with a 70cl bottle of Scotch and topped it up with a 16 year old Lagavullan Malt.
“ I must admit I had my doubts, but it actually works”, the 59 year old said.
“We are experimenting at the moment. It’s far from perfect, but were working on it”. He said
A 50 gallon barrel of whisky costs over £2000 before tax. Petrol would be much cheaper at around £300.
But Middleton 54, says islanders could get around this because people are allowed so much whisky for personal consumption and they could distil their own “home brew”.
“We know it makes the cars go. The question now is will we be allowed to distil our own and instead of drinking it, just pour it into our vehicles” he said.
Its all about cost. But the way things are going whisky is may end up being cheaper than petrol. “Islay gives millions to the Exchequer every year and we get very little in return. Surely the Chancellor could grant us some leeway to develop whisky fuel” he added.
Engine expert John Cooper, from Glasgow University, last night agreed whisky does work as fuel. “It is not as refined as petrol and diesel but it will work”, he said.

The introduction of Industrial Distilleries
There weren´t any commercial whisky producing distilleries in Scotland in the 15th and in the 16th centuries. We know this because of documentation of the incident entrered into the Gamrie and Banfshire Parish Register of the Privy Council in 1614 as stated above. The earliest reference to a distillery in the Acts of the Scottish Parliament appears to be in 1690, when mention is made of the famous Ferintosh distillery owned by Duncan Forbes of Culloden.
Although a handful of 'industrial' distilleries sprang up during the 17th and 18th centuries malt whisky distilling was still essentially still a domestic activity until the 1820s. Just as most rural households brewed beer, so, especially in the Highlands, did they distil uisge beatha. Indeed, it was as essential to the rural economy - paid rents, used up surplus grain and provided cattle feed from spent grains - as it was to rural society, easing the hard lives of poor people in colder northern parts of the country with an inclement climate.

The introduction of Taxes and Excise

The Scots Parliament in 1644 passed an Excise Act fixing the duty at 2/8d (13p) per pint of aquavitae or other strong liquor - the Scots pint being approximately one third of a gallon. For the remainder of the 17th century various alterations were made to the types and amounts of duty collected. The Tax was raised with the intentions of raising finance for the Royalist Army.
A treaty between Scotland and England signed in 1707 stipulated that the taxes on alcohol has to be the same on both sides of the border. In addition, a tax on malts was introduced in Scotland in 1713. This tax existed in England, but was not part of the treaty. This resulted in very violent demonstrations. The residence of Daniel Campbell of Showfield has been devastated and 11 people living with him were killed during one of this protest actions. As a compensation, the City of Glasgow paid a sum of 9000 pounds. With that money, he purchased the Isle of Islay.
The troubles of high taxation only started after 1707 when the Union Act between England and Scotland was established. The English saw a way of making huge sums of money by introducing the Malt Tax in Scotland and other various taxes which related to the making and selling of Whisky. English revenue staff crossed the border to begin their lengthy attempts to bring whisky production under control. Suddenly the whisky producers faced severe problems caused by heavy taxation which continues to this today. As the 18th century was coming to an end, ninety years after the English revenue staff crossed the border, the excise laws were in such a hopeless state of confusion that no two distilleries were taxed at the same rate. There were only a handful of commercial stills, and the quality of the whisky from these dropped significantly as the high tax meant that they had to lower standards.
Illicit distilling flourished, the smugglers seeing no good reason for paying for the privilege of making their native drink so whisky production nevertheless thrived. It is believed that at one time there were 40,000 illicit stills in Scotland. In the famous song “Auld Lang Syne” by the Scottish poet Robert Burns, the “cup of kindness” being raised is doubtlessly whisky. Of course, there aren´t fierce skirmishes with the taxmen nowadays but in the past centuries much blood was spilled for the sake of this brown liquid.
1736 Porteous Riots in Edinburgh result of capture of smugglers Wilson and Robertson. Escape of Robertson arranged by Wilson, who was hanged. Mob fired on by Porteous in command of troops. Porteous lynched by mob subsequently when about to be reprieved. Smuggling very common and Excise officers mainly English and disliked Magistrates of Middlesex petitioned Parliament regarding gin. The Gin Act aimed at preventing consumption caused open flouting of law; Scotland specifically exempted from its provisions
In order to fight against the devastating effects of alcoholism in those times, England decided to increase seriously the taxes on gin produced on its territory as well as on the genever produced in Holland. However, the "Gin Act" of 1736 did not mention the Scottish uisge beata.
The effect was immediate, and the result was a huge progression of production of uisge beata in Scotland. The production increased from about 100.000 gallons in 1708 to 250.000 gallons in 1736. However, according to documents from that time, the great majority of the production was absorbed by the local market.
In the same period, the gaelic term "uisge beata" to design water of life has been altered and corrupted, to become uisky of whisky.
A new important increase of the production happened round 1750, and again it appears that the local marked absorbed it nearly entirely.
This is one of the curiosities of history. The distilleries increase their production in order to take advantage of a lack in a low in England, hoping to export their whisky, but in fact only contributed in a worrying increase of alcoholism on their own territory.
Lots of distilleries have been created in those days. One of them was the Dolls distillery (later renamed Glenochil) which has been founded in 1746 and Gilcomstan (in Aberdeen) in 1751
A disastrous harvest in 1756 obliged the government to forbid distillation on the whole territory. The whisky production decreased by 90% in a few months. This did not impeach home distilleries to continue, of course. Home distillation was not prohibited in those days, if intended for own consumption only, but it was strictly forbidden to sell home made whisky.
The times were hard, and the recently founded Gilcomston distillery has been reconverted into a brewery in 1763. The times were hard for legal distilleries.
The general prohibition about production of alcohol in the legal distilleries encouraged the private producers to sell their alcohol. Lots of people broke the law.
Private production became very important from 1760. It was nearly ten times more important than the official one (which fell beneath 50.000 gallons a year). But the global production was very close to the production before the prohibition. The era of moonshine distilling was born.

The first measures taken by the authorities were not really efficient. They first forbid the use of small stills (less than 500 gallons for wash stills and less than 100 gallons for spirit stills). hey also sealed the stills, in order to avoid them working without authorisation. The pernicious effect of this laws was that new distilleries had to cease their activities (they nearly all disappeared in no time), but did not affect the greatest one (Ferintosh) at all. Another effect was a new important extension of moonshine distillery.
The number of moonshine distilleries was estimated at about 400, for 8 official ones in 1777 in the city of Edinburgh.
The alcohol consumption was very important in those days. Whisky was drunk besides beer and wine. The "normal" consumption was about one dram (1/3 pint) at 60% a day.
The technical progresses made it possible to produce quite better alcohol. This enabled to drink whisky on its own, and not as earlier, just in cordials (with aromatic herbs and sugar added, to hide the bad taste of the whisky at that time) or in punch.

1751 Act amending laws on spirits specifically ended Scotland's exemption, so that it was no longer advantageous to import from Scotland
For some unclear reasons, a significant increase of the production of official whisky happened in 1777, going from 70.000 gallons a year to 190.000 in 1779. One of the reasons was that the new distilleries continued producing whisky partly with non malted barley (cheaper because of the taxes), to be able to fight against the home production.
Protectionist measures have also been taken against foreign alcohols (brandy and wine) to protect the local agriculture.
At the same period, the government entirely forbid the production of home made whisky, authorising the excise agents to seize or destroy all the private stills all over Scotland. This was the beginning of the war against moonshine distillers.
This new measures have been preceded two years earlier by severe restrictions on the size of authorized home stills, which were no more allowed to exceed a capacity of 2 gallons (against 10 previously).
The major reason for the government to prohibit the private stills was the need to finance the war against the American colonies. A bonus was even paid to anybody who made it possible for the excise agents to find an illegal still. This money was usually reinvested in a new still... This was another governmental measure proving its inefficiency in the fight against moonshine distilling.
While the government was fighting hard against the moonshine distillers, the legal distilleries experienced a significant improvement of their activities. From the 1780's, number of legal distilleries has been founded in the Lowlands.
Two great families especially enjoyed from this expansion: the Stein (allied to the Haig) and the Philp, owners of the Kilbagie, Kennetpans and Dolls distilleries. Kilbalgie, belonging to the Stein will become the biggest distillery of Scotland, and will later be converted in a paper mill which is still active currently. The Stein, allied to the Haig founded the Canonmills and Lochrin distilleries in Edinburgh and Kincaple in St Andrews at the same period. Other distilleries were born too in those days, like Blackhall (Alexander Dewar), Underwood and Hattonburn. This distilleries became quickly the heart of the economic life in the Lowlands. Their production waste was used to feed the cattle, and the distilleries were rapidly considered as essential to the local agriculture. On the other hand, they offered great prospects to the local coal mines.
The production in the Lowlands had reached such a level that the local market has become to small, and the Stein were looking for other outlets. They sold their whisky to the gin producers who used it for rectification of their blends.
The pernicious effect of this was that the local barley production was insufficient to cover the needs of the distilleries, and the first imports of barley from England and Europe took place during this period.
Thanks to this import, the industry survived the very bad harvests between 1782 and 1784 which caused a starvation on the whole Scottish territory, and especially in the Highlands. This did not impeach the distilleries to go on with their production, provoking riots by hungry people.
The g An intensification of the controls by the excise administration on the legal distilleries permitted the Wash Act to be published in 1784. The spirit of this law was a simplification of the taxation method. The taxation level was also considerably decreased in Scotland and in England, because the independence war in America was ended.
Instead of taxing the “low wines" and the spirit separately, only the “wash” was taken into consideration under the new law. The tax was based on the assumption that 5 gallons of wash produced 1 gallon of spirit between 55% and 65%. This system was accompanied by very strict controls, which could take place any time in day or night. The government supported the distilleries, because of their economic importance.
Special measures were taken in favour of the Highlands, partially to compensate the consequences of the food shortage. The idea was to encourage the small moonshine distilleries to become legal ones. The law determined a maximum size for the stills, and just authorized the use of local barley, and as compensation, the level of the taxes was sensibly reduced. The tax on the malt has even been suppressed. On the other hand, any infraction would be severely repressed, and the landlords were considered as responsible for offences by the people living on their estates.
The latest measure made the landlords very angry. The Lowlands producers said this was discrimination, as they did not benefit from preferential measures. These protest actions obliged the government to take some new measures in 1785. Any export of Highland whisky has been prohibited outside the Highlands, and the responsibility of the landlords has been suppressed in case of infractions by their people.
The export prohibition made to the Highland whiskies (which quality was much higher than in the Lowlands), gave a second life to smuggling.
The main difference between whisky from the Highlands and Lowlands came from the shape of the stills. The stills in the Highlands were better shaped to produce quality spirit.
At the beginning of the industrial revolution, the distilleries belonging to the Stein and Haig were the biggest industrial plants in Scotland.
The huge production increase and the export to England was considered by the rich London gin merchants as a very bad news, and they began to fight against the growing importance of Scottish whisky. An implacable price war began between the gin and the whisky producers. The whisky producers were obliged to sell their whisky under the cost price.
Another consequence of the actions by the gin merchants lobby was an increase of the taxes on the Scottish spirit. This just affected the Lowlands whisky, as the Highlands could not be exported, due to the export prohibition.
The reaction of the Lowlands industry against the sudden increase of their production costs was a technologic move, making faster production possible for less money. It is obvious that such a move could not have beneficial effects on the quality of the Lowlands whisky.
Another reaction was an increase of the Highland whiskies prices, due to the supply and demand economical law, even if the whole business was only based on smuggling, as the Highlands whisky could not be exported.
The economical importance of whisky in Scotland dates back to this period, which was the beginning of the capitalist era. In those days already, whisky was the major industry in the country.
The whisky industry was important to the Scottish industry, especially in the Lowland, but was loosing the price war against the London gin producers.
Very bad news for the Scottish distilleries was the promulgation of the Lowland Licence Act, which required a 12 months from the distilleries working for the English market. This meant that the Lowlands distilleries just must cease trading for one year, which had catastrophic consequences on the Scottish industry.
In addition, the distilleries were required to word from wash stills of at least 200 gallons and spirit stills of at least 50 gallons. And the duty on spirits exported to England rose.
The consequences of all those measures did not only affect the distilleries, but also the agriculture which was recently geared to produce barley for the distilleries and relied on draff to feed their cattle.
Amongst the first victims of this new measures, Sandeman & Graham, the London agents of the great Kilbagie distillery, belonging to James Stein. The 5 most important distilleries in those days ceased trading: Kennetpans, Kincaple, Hattonburn, Lochrin and Canonmills (all of them were related to the Stein or Haig families). This 5 distilleries were responsible for about 50% of the Lowlands production. Their debts approach 700.000£ (about 20.000.000£ at 2000 prices) and had consequences on the Scottish banks, creditors of the distillers.
Those 5 distilleries were not the only ones to cease trading. Many other followed, amongst them: Underwood near Falkirk, Anderston in Glasgow, Cunningham Park in Ayr, Ailnamuir, Ferintosh and Doghillock.
Those difficulties did not drive the Stein and Haigs out of the whisky-making history. Their creditors realized the problems were largely due to changes in the law and accepted to help them to re-enter the trade. First of all, both families ceased supplying the English market and registered for Scottish market.
One of the consequences of this next strategy of both families was a flood of cheap and harsh whisky on the Scottish market.
New taxes, intended to help financing the war against the revolutionary France, were introduced. And again the reaction of the industry was an increase of the produced quantity and a decrease of its quality. The tax was on the still capacity, and distilleries decided to produce more with the same stills, e.g. produce faster. Stills were charged up to 25 times a day (against 1 or 2 in the traditional process).
But this massive production made some technical improvements necessary. One of the changes in the making process was the pre-heating of the wash. Very large stills, designed for massive production were installed.
The cheap whisky produced that way overrunning Scotland led to a great increase of the whisky consumption in the country.
Taxes rose again to finance war against Spain and France, and the making process of whisky continued its evolution until the end of the 18th century, with still the same decrease in the quality as a consequence. Stills were charged up to 90 times a day in those days in Lowlands. Lowland distilleries produced about 90% of the whisky in Scotland.

The situation of distilling in the Highlands was radically different from the Lowlands. Highland distilleries were not huge industrial plants like in Southern Scotland.
Distilleries were merely owned by local farmers sometimes joining in cooperatives, and the production was not that massive. Highland production represented less than 10%, but on the other hand, no concession to quality has been done. The Highland whiskies were much better, but also much more expensive than the Lowland ones.
Distillation was never the main activity, and nearly no one was dependent on it for his livelihood. Generally, local peat was used to heat the stills, and some people began encouraging the use of Lowland coal, as peat reserves are not inexhaustible.
Despite this facts, many distilleries were forced to close, due to a strengthening of the distillation laws. Tax increases were also problem for the Highland producers. This situation, combined to a increasing demand or good whisky from the Lowlands encouraged the rebirth of moonshine distilling and smuggling.
Distilleries like Ardbeg owned by Alexander Stewart and Craigentinny in Edinburgh bankrupted.
Distilleries in Campbeltown (which were officially excluded from the Highlands in 1795) were driven underground. Also in Speyside, moonshine distilling and smuggling were raising again.
Moonshine distilling and smuggling became part of the local traditions, and remained unpunished because of the complicity of local authorities.
Catastrophic harvests during the first years of the 19th century made the government take the decision to prohibit distillation, as the grain was hard needed for food production. In addition to bad harvests, the Napoleonic wars on the continent made import of grain nearly impossible. This import restrictions did apply to brandy too. Many notables had to change their drinking habits and started drinking whisky. The successive taxes increases during the first years of the century had a limited effect on local consumption.
The consumption of whisky was resuming and the great Lowlands distilleries knew a new era of prosperity. English marked was opened again, but only to big producers, as the law oblige exporters to produce their spirit in stills of at least 3000 gallons.
The Highland distilleries did not benefit from this new conditions, and their problems with illegal distillation remained. Starvation in North Scotland continued, and the landlords joined (slightly) the authorities to fight moonshine distilling, arguing that grain was so hard needed for food processing that is was a crime to use in for producing whisky. However many landlords collected part of their rents in whisky.
The authorities began to understand that the only way to kill moonshine distilling was a liberalisation of the rules and a significant decrease of the taxes on whisky. So, in 1816 taxes were divided by 3 and the use of smaller stills (at least 40 gallons) was allowed again. The effect was nearly immediate. The number of distilleries acting in the Highlands increased from 12 to 39 in 1817 and to 57 in 1859, and from 24 to 68 in the Lowlands.
The use of smaller stills made the use of other distillation techniques possible, with often better results. Legal distilleries, owning greater stills, found it very difficult to produce whisky with a quality comparable to the one produced illegally.
However, starvation broke out again the same year, and at the same time a new increase of moonshine distilling, due to lack at grain. And the struggle between excise men and moonshine distillers began again. Harder than ever.
The promulgation of the "Excise Act" in 1823, decreasing the taxes again, and the end of the 12 months notice for exports to England meant the end of the monopoly of the Steins and Haigs in the Lowlands and the monopoly of moonshine distillers in the Highlands.
Encouraging measures made the generalisation of use of malt instead of grain (used in the big distilleries in the Lowlands) in the distillation process possible and contribute greatly to the increase of the quality of Scotch whisky.
Legal restriction were nearly disappeared, and the success of the whisky industry was from now depending of the market laws.

1786 Distillery Act. Licensing system introduced. Duty raised in Scotland to English level. No distinction between Highlands and Lowlands. Unfair system gave great impetus to illicit distillation

1793 Tax on whisky trebled to £9. Still the distillers continued to produce more whisky than had been estimated by tax officials. William Hill set up in Rose Street, Edinburgh, as a whisky merchant

1795 Tax on whisky doubled to £18. Some stills operating continuously to beat tax at expense of wearing out still. Shape changing for sake of speed

1797 Tax trebled to £54


1815 The output of the distillery at Drumin in Glenlivet run by George Smith, grandson of John Smith Gow, was already a hogshead a week. Due to the pure water and fine peat available the whisky in Glenlivet was famed as being the finest illicit whisky in tho Highlands. It was drunk by many northern lalrds, including Grant of Rothiemurchos, M.P. and lawyer. Laphroaig distillery on Islay was built by the Johnstone family.

After a lengthy Royal Commission, the Act of 1823 sanctioned legal distilling at a duty of 2/3d (12p) per gallon for stills with a capacity of more than 40 gallons. There was a licence fee of £10 annually and no stills under the legal limit were allowed. The first distillery came into ‘official’ existence in the following year and thereafter many of the more far-sighted distillers came over on to the side of the law.
It was in 1823 when the Excise Act was passed. This act allowed everyone to distill more than 40 gallons of whisky if he payed an annual fee of 10 pounds for the permission. The first distillery came into ‘official’ existence in the following year and thereafter many of the more far-sighted distillers came over on to the side of the law. Although the tax were impudently raised in the 19th century a gigantic industrial branch was created establishing the Scotch Whisky as the most famous national drink in the whole world. Blended whiskies became popular later in the century, and in 1909 a Royal Commission allowed grain spirit to be described as whisky. Blended Scotch became one of the most popular spirits in the world in the 20th century. In 1995, for the first time in 150 years, the tax on Scotch Whisky was reduced.
1824 Under the aegis of his landlord the Duke of Richmond and Gordon, farmer and illicit distiller George Smith was the first to take out a licence under the new Act. The first legal distillery in Glenlivet, his neighbours threatened to burn it down Gillespie made a notable haul of illicit Glenlivet whisky in a desperate battle with smugglers. Gillespie then applied for a less arduous post.

1932 Prohibition was repealed by President F. D. Roosevelt.

In 1840, the duty was 5d (2.5p) per bottle and by the beginning of the First World War it had risen to 1/81/2d (9p). In 1939, a typical bottle of Scotch Whisky cost 14/3d (72p) of which 9/71/2d (48p) was duty. By 1992, after a succession of duty increases, the same bottle was costing around £10.80. The duty on it was £5.55, equivalent to £19.81 per litre of pure alcohol.

In 1995, for the first time in one hundred years, the tax on Scotch Whisky was reduced. Duty fell from £5.77 to £5.54 a bottle (70cl). In 1996, the tax on Scotch Whisky was again reduced.

Since 1973 the price of a bottle of whisky, including the Excise Duty, has been subject to a Value Added Tax.
In A single European market why can Scots whisky actually cost less in Europe than in can in the UK?
A 70cl of blended scotch whisky might sell for £10.70 in the UK. Tax would take £7.07 OR 66% of the retail price.
In 10 out of 15 European countries, lower taxes mean that the same bottle is sold for less.
Spain about £4.50 about 40%
Italy about £4.85 about 40%
Germany about £6.40 about 49%
France about £6.60 about 55%

Scots declare war on new British Government tax plans, Wed 25 Feb 2004
Scottish politicians and the Scotch Whisky Association have united against British Government tax duty plans which they say will lead to greater costs and a potential restriction on small and specialist bottle runs.
And the SWA has fiercely condemned the move to introduce paper tax stamps for whisky bottles as an outdated and ineffective way to battle fraud.
But the Government has laid down a challenge to the industry: come up with a better idea or the paper stamps will be brought in.
In an exclusive interview with Whisky Magazine Economics Minister John Heeley said that after considering the problem carefully the Government had been given no choice but to act because the problem of fraud was in danger of spiralling out of control.
The massive fraud problem has arisen because international gangs have exploited a European directive which allows duty to be paid not at the production point but at its final destination warehouse.
Producers are legally selling spirits which they think are destined for European destination.
But the whisky is diverted by corrupt distributors and although the correct paperwork is returned saying that the product reached its destination and duty was paid, in actual fact it never leaves the country and is sold back to unsuspecting retailers for sale.
Although it’s hard to estimate the size of this sort of fraud, the Government believes it accounts for 16 per cent of the value of the spirits market – and it says the figure is growing.
Just three weeks ago the scale of the problem was revealed when corrupt customs officials were given lengthy prison sentences after conspiring in this type of fraud.
Now John Heeley says it must end – even if there is a cost to the whisky industry. And he says that stamps applied at source to show duty has been paid will alleviate the problem.
“We have considered the options very carefully and can see no other way,” he said. “(British Chancellor) Gordon Brown has a great deal of sympathy with the Scotch whisky industry.
“He is a Scot and understands fully its problems. That’s one of the reasons why duty under this Government has been frozen, offering the industry a substantial reduction in tax in real terms.
“But unless the industry can come up with a better way of stopping fraud we have to act. It is the only area of tax fraud we have failed to bring under control.”

Mr Heeley said that the Government would look at ways to help whisky producers with costs of complying with any directives, and said that tax duty would not be raised on spirits for the rest of the lifetime of the current parliament.
But there is fierce disagreement as to how wide-scale the problem of fraud really is, and as to how great the costs will be to the trade.
The biggest fear is that it will have an uneven impact on producers.
Then costs will either mean higher prices for the customer – a potentially fatal outcome given the brittle nature of the premium whisky market – or it will effect production, making small runs of special bottlings particularly from small distillers impractical.
Gavin Hewitt, chief executive of the SWA, said that on Government estimates, there were 200,000 bottles of illegal spirits being shipped every day. That, he said, was both an unproven figure and contradicted other much lower estimates.
Nor did the SWA believe that paper tax stamps would resolve the problem.
“Fraud must be defeated but paper stamps over the top of a whisky bottle is a 19th century attempt to beat 21st century fraudsters,” he said.
“Experience shows that strip stamps do not work and that they have been rejected or abolished by countries across the world. They make a mockery of the Government’s commitment to reduce red tape and costs on industry.
“They would be a hammer blow to Scotch producers, in particular smaller distillers, with compliance costs running into millions of pounds.”


Further pages on this story - Two kinds of Whisky - Making of the Whiskey - Facts of Scottish Whisky

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