In a statement to the House of Commons, Exchequer Secretary to
the Treasury laid out a plan designed
to provide certainty and reassure pubs, distilleries, and
breweries as they face a challenging period ahead.
While new duty rates usually come in on the 1 February each year,
Mr Cartlidge set out that this year the duty rates decision will
be held until the Chancellor delivers his Spring Budget on
the 15 March 2023.
Further, the Minister made clear that if any changes to duty are
announced then, they will not take effect until 1 August 2023.
This is to align with the date historic reforms for the alcohol
duty system come in, and amounts to an effective six month
extension to the current duty freeze.
As part of the government’s commitment to responsible management
of the UK economy, these changes will provide pubs, breweries,
distilleries and other alcohol-related businesses with increased
certainty to plan and make investment decisions more effectively.
Exchequer Secretary to the Treasury said:
“Today’s announcement reflects this government’s commitment to
responsible management of the UK economy and supporting
hospitality through a challenging winter.
“The alcohol sector is vital to our country’s social fabric and
supports thousands of jobs - we have listened to pubs, breweries
and industry reps concerned about their future as they get ready
for the new, simpler, alcohol tax system taking effect from
August.
“That’s why we have acted now to give maximum certainty to
industry and confirmed there will be just one set of
industry-wide changes next summer.”
The current alcohol duty freeze was announced at Autumn Budget
2021, saving consumers over £3 billion over five years. It was
expected to come to an end on 1 February 2023, following the
Chancellor’s reversal of most of September’s Growth Plan to
restore trust in the economy and strengthen public finances.
At Autumn Budget 2021 the government announced the biggest
reforms to alcohol duty in 140 years. The changes overhaul the
UK’s outdates rules following exiting the EU by radically
simplifying the entire system and slashing red-tape. To give
industry more time to prepare, September’s Growth Plan set out
that the reforms would take effect from 1 August 2023.
The new alcohol tax system will adopt a common-sense approach,
where the higher a drink’s strength the higher the duty, whilst
new reliefs will be made available to help pubs and small
producers thrive.
New Draught Relief will be worth £100 million a year and will
ensure smaller craft producers can benefit, the threshold for
qualifying containers will be 20 litres.
Small Brewers Relief will be renamed Small Producer Relief,
reformed and expanded. Until the revamp, a cliff-edge existed
when relief is withdrawn for brewers who make more than 5,000
hectolitres a year. This will be addressed, there will instead be
a gradual taper to the removal of relief, which will empower
small breweries to grow, after they had made clear through
consultation that the current design was acting as a barrier.
Further, the expansion of the relief means that all producers
that make drinks below 8.5% – mostly craft brewers and
cidermakers – will be able to get relief on their products.
The alcohol duty reforms will help create a simpler, fairer and
healthier duty system. Higher rate for sparkling wines will come
to an end, meaning they will pay the same rate as still
wine. Liqueurs will be put on the same footing as fortified wine,
meaning a sherry and Irish Cream will now pay the same duty, and
super-strength ‘white cider’ will rise to address public health
concerns.
The wine industry will also be supported as they adapt to the new
system. All wine between 11.5-14.5% alcohol by volume (ABV) to
calculate duty as if it were 12.5% ABV for 18 months from the
implementation of the new system.
Further information
