Alcohol change

New duty regime boosts pubs over supermarkets

Beer served on tap will be cheaper

Pubs will enjoy a price advantage over supermarkets from today as a new duty system on alcohol comes into effect.

More than 38,000 pubs and bars will charge up to 11p less in duty than retailers in a move demanded by industry leaders such as Tim Martin, chairman of Wetherspoon.

The change is designed to help pubs compete on a level playing field with supermarkets and has been labelled by the UK Government as The Brexit Pubs Guarantee.

It was announced in the Chancellor’s Spring Budget and secures a pledge that pubs will always pay less alcohol duty than supermarkets.

It comes as other landmark changes to the alcohol duty system also come into effect today, which see drinks taxed by strength for the first time and a new relief – named Small Producer Relief – to help small businesses and start-ups create new drinks, innovate and grow.

Today’s changes have automatically lowered the duty in shops and supermarkets including certain bottles of pale ale, pre-mixed gin and tonic, hard seltzer, Irish cream, coffee liquor and English sparkling wine, amongst others.

Prime Minister Rishi Sunak said: “I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.

“Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.

“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.”

Chancellor Jeremy Hunt added: “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 21stcentury, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially.”

The changes also coincide with Scottish Government plans to increase the minimum unit price of alcohol in a move to cut consumption and improve public health.

The Treasury said that the three alcohol duty changes are only possible because of the UK’s departure from the EU and the guarantees set out in the Windsor Framework.

The key changes are:

  • All products taxed in line with alcohol by volume (ABV) strength, rather than different duty structures for different drinks
  • Fewer main duty rates, from 15 to 6, to make it easier for businesses to grow and operate
  • There will be lower taxes on lower alcohol products – those below 3.5% alcohol by volume (ABV) in strength – a huge growth area in the drinks industry
  • All drinks above 8.5% ABV will pay the same rate regardless of product type

This will mean that many UK favourites will see duty reductions. Irish cream will drop by 3p, cans of 5% ABV ready-to-drink spirit mixers by 6p, Prosecco by 61p and 500ml 3.4% pale ale by 20p a bottle.

The UK alcoholic drinks market reached just under £50 billion in 2022, up 6% year on year and is expected to continue to grow – sales are forecast to reach £60.9 billion in 2026. The UK government is laser-focused on continuing this burgeoning success.

The government is introducing Small Producer Relief effective from today which replaces and extends the previous Small Brewers Relief scheme.

This allows small businesses who produce alcoholic products with an ABV of less than 8.5% to be eligible for reduced rates of alcohol duty on qualifying products.

The new tax relief scheme promotes innovation in the drinks sector, giving small producers the financial freedom to experiment with new types of drink and grow their business. It also supports the modern drinking trend of lower alcohol beverages.

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