Gov to launch new Alcohol Duty rates and reliefs
Small businesses as well as pubs and restaurants will benefit from ‘reduced’ rates on qualifying products, such as draught beer and cider
HM Revenues and Customs (HMRC) has announced that on 1 August 2023, the Alcohol Duty system will become much “simpler”, taxing all alcoholic drinks based on their alcohol by volume (ABV).
The new Alcohol Duty system will replace the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.
According to HMRC, the new system will make the system “fairer” and “responsive” to new products entering the market as consumer tastes evolve.
Small businesses as well as pubs and restaurants will benefit from “reduced” rates on qualifying products, such as draught beer and cider.
The new system reflects the government’s commitment to “tax simplification, helping to foster the right conditions for businesses to prosper and the economy to grow – one of the Prime Minister’s five priorities”.
The new system will create six standardised Alcohol Duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.
These reforms will replace and extend the existing Small Brewers Relief with Small Producer Relief.
This means that all small businesses that produce any alcoholic products with an ABV of less than 8.5% will be eligible for reduced rates on qualifying products, if they produce less than 4,500 hectolitres per year.
To support the hospitality industry, and recognising the vital role played by pubs in our communities, there will also be a reduced rate for draught products – known as Draught Relief.
This will reduce Alcohol Duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants.
The reforms will mean that every pint in every pub across the UK will pay less duty than their supermarket equivalent, in line with the government’s Brexit Pubs Guarantee.
To support innovation and responsible drinking, low strength drinks below 3.5% ABV will be charged at a new lower rate of duty. In making these changes, the government aims to encourage product innovation and ensure the Alcohol Duty system works for business and consumers.
Gareth Davies, exchequer secretary to the treasury said: “Because we left the EU we can make sure our Alcohol Duty system works for us. From next month the whole system will be simpler – the duty will reflect the strength of the drink. We will also protect pubs and brewers with our Brexit Pubs Guarantee keeping Draught Duty down, and a new Small Producer Relief.”
Jonathan Athow, director general of Customer Strategy and Tax Design, HMRC, added: “After listening to feedback from industry, economists, public health groups and many business owners, the new Alcohol Duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time. The new system will support the government’s public health objectives and provide extra support to small producers, pubs and the hospitality sector.”