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Budget 2021: Beer and spirits

Freeze on alcohol duty will warm the spirits

Cheers: Good news for pubs

Pubs and bars severely hit by the pandemic received a welcome boost with the news that alcohol duty is to remain frozen for the second year running.

Chancellor Rishi Sunak announced the news that he has scrapped a planned hike in his Spring Budget, with the move intended to help the struggling businesses through the next few months.

“This is a tough time for hospitality so I can confirm that the planned increases for spirits such as Scotch Whisky, wine  cider and beer will all be cancelled; all alcohol duties for the second year in a row, only the third time in two decades.”

Commenting on the 5% VAT relief extension for hospitality businesses, Scott Craig, head of VAT at Azets, the UK’s largest regional accountancy and business advisors to SMEs and Top 10 accountancy firm, said: “The extension of the 5% VAT relief for hospitality businesses and an interim rate of 12.5% is only of any value if the hospitality sector can reopen.

“The economy needs to reopen first, and hospitality businesses allowed to trade so the sector can benefit – and we seem to be a long way from that point. Clarity is also needed on rules relating to advance bookings.”

Murdoch MacLennan, Head of Brewing and Distilling at Azets, added: “We welcome the freeze on alcohol duty which helps not just the powerhouse of the Scotch Whisky industry but also many SME craft brewers and craft distillers who have been so important to the local economies of the UK. 

“The duty freeze will also soften the blow of increased tariffs on Scotch Whisky in the United States and the impact of Brexit on SME craft brewers and distiller exporters”.

Karen Betts SWA

Karen Betts: good news (pic: Terry Murden)

The UK currently pays £3.6 billion in beer duty every year, which is more than France, Germany, Italy, Spain and Ireland combined. An average British lager is taxed around 11 times higher – usually 54p on a 5% pint – than the equivalent beer in Germany and Spain of 5p.

Chief executive of the Scotch Whisky Association Karen Betts said:  “The freeze on duty announced by the Chancellor is good news for hospitality and gives distillers some breathing space in the face of some of the worst trading conditions anyone can remember – caused by a combination of US tariffs, the coronavirus pandemic and the end of the Brexit transition period. “

CAMRA’s national chairman Nik Antona said: “CAMRA had hoped to see the Chancellor announce a cut in duty on beer served on tap in pubs and social clubs to benefit consumers and help the great British pub recover and thrive in the difficult months and years ahead by being able to compete with supermarket alcohol. 

“CAMRA will continue to call for a lower rate of duty for beer served in pubs – an option available to the Government now we have left the European Union.” 

The Hospitality Professionals Association (HOSPA) said the government hadn’t gone far enough.

“The £18,000 figure quoted by the Chancellor, whilst ample for smaller businesses, isn’t enough for bigger hospitality businesses, hotels and hotel groups – the largest employers, with the largest overheads,” said Jane Pendlebury, chief executive of HOSPA.

There was also good news for drivers with a planned increase in fuel duty also cancelled, with the Chancellor saying it is right to “keep the cost of living low”.

It’s the 11th time in a row that fuel duty has remain unchanged.

Budget 2021 reports here

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