Campaign reply - Alcohol Duty

Thank you for contacting me about alcohol duty.

On 1 August 2023, the alcohol duty system became much simpler and fairer, taxing all alcoholic drinks based on their alcohol by volume (ABV). I welcome the Government’s commitment to supporting pubs through increasing draught relief from 1 August 2023 as announced at Spring Budget 2023. This freezes the duty charged on a typical pint of beer in the pub and ensures this will always be lower than in the supermarket.

To further support alcohol producers, pubs, and the hospitality sector, and to help consumers with the cost of living, the Government will freeze alcohol duty from 1 August 2024 until 1 February 2025, extending the six-month freeze announced at Autumn Statement 2023. This will result in 2p less duty on an average pint of beer, 1p less duty on an average pint of cider, 10p less duty on an average bottle of wine, and 33p less duty on an average bottle of spirits, than if the planned duty increase had gone ahead.

All tax categories, such as beer and wine, have been moved to a standardised set of bands, with rates for products between 1.2 and 3.4 per cent ABV, 3.5 and 8.4 per cent ABV, 8.5 and 22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories pay the same rate of duty if they have the same proportion of alcohol content.

Registration and payment have also been simplified, and the practice where individual products have different administrative rules has ended. The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change addresses the problem of harmful high-strength products being sold too cheaply, and the new rates for low-strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.

I welcome the introduction of a new Small Producer Relief, which builds on the previous success of the Small Brewers Relief and benefit cidermakers and other producers of lower ABV drinks. This will allow small producers to diversify their product range to other products below 8.5 per cent ABV while still benefitting from reduced rates.

Thank you again for taking the time to contact me.