Major reforms to alcohol duty have come into force from 1st August, bringing tax paid in line with alcohol strength, and reducing the duty on draught products in pubs.
The changes were first announced at the Autumn Budget in 2021 to modernise a system that had been in place for 140 years. The new regime links duty with the alcohol by volume (ABV) of a product and reduces the number of duty categories from over 30 to just six.
In addition, the duty paid on drinks sold ‘on tap’ in pubs will be lower than for the same product sold by a retailer: including VAT, this represents an 11 pence reduction in duty for an 8.4% beer. The changes are designed to help pubs compete on a level playing field with supermarkets, so they can continue to thrive at the heart of communities across the UK. In his Spring Budget, the Chancellor also pledged that pubs will always pay less alcohol duty than supermarkets going forwards.
A Small Producer Relief will also be introduced, allowing smaller brewers and producers to be eligible for reduced rates of alcohol duty of eligible products of 8.4% ABV and below.
Jeremy Hunt, Chancellor of the Exchequer, said:
“British pubs are the beating heart of our communities and as they face rising costs, we’re doing all we can to help them out. Through our Brexit Pubs Guarantee, we’re protecting the price of a pint.
“The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially.”
Stockport’s Robinsons Brewery, the tenanted and managed estate of which includes a significant number of Cheshire pubs, has welcomed the cuts for duty for pubs in light of rising costs for the hospitality sector:
“Duty increases are never welcome, especially when pubs are facing 22%+ food inflation, minimum wage increases to £10.42 and utility bills increases. As an example, the Black Horse has seen their gas and electric go up £30K per year. However, the new rules mean we have 6 duty categories (down from 30+) and the system needed a change after 140 years.
“We welcome the duty relief on all draught beers and ciders which will help mitigate some of the other cost increases and have developed Citra Pale Ale at 3.4%, which sees a fall in duty of 22p per pint from today as it falls below the governments “new” lower threshold of 3.5%.
“At the other end we are sad to see that Old Tom at 8.5% is above he upper threshold of 8.4% and so does not benefit from the duty relief. We may adjust ABV accordingly after 124 years of brewing it. Ironically, it is today shortlisted for Champion Beer of Britain at CAMRA’s Great British Beer Festival in London.”