Alcohol Duty Changes

The government has announced changes to alcohol duty based on the strength of a beverage under what they are calling ‘common-sense’ principles.

From 1^st August 2023, alcohol duty on most wines and spirits will increase, however they will fall on lower percentage alcoholic drinks and most sparkling wines. In an additional measure designed to support pubs, taxes on draught pints will not change. As a result of this, draught beer in pubs will pay approximately 11p less tax than supermarket beer.

Alcohol duties have been frozen since 2020 and scheduled changes to the duties were delayed by the government in light of the cost-of-living crisis. However, due to recent changes in the economy the government has continued with their planned changes. These include a 10.1% rise in alcohol duty and a major overhauling of the system. Drinks with an alcohol percentage lower than 3.5% will be taxed at a lower rate, but those with a percentage over 8.5% will stay the same. Subsequently, products such as sparkling wine will no longer be taxed at a higher rate, making them cheaper than a standard strength bottle of wine. The Wine and Spirits Trade Association (WSTA) has predicted that the tax on a bottle of wine with an alcohol by volume (ABV) percentage of 12% will go up by 44p, whilst the tax on wine with a 15% ABV will rise by 98p.

Chancellor of the Exchequer Jeremy Hunt commented:

The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low-alcohol drinks and boosting growth in the sector by supporting small producers financially.

Nevertheless, the government has come under fire for these changes with concerns that price increases will have to be passed onto the consumer. Whilst the Treasury has insisted that it will boost pubs across the country, the 12% increase could see up to £1 added to bottles of wine, spirits, sherry and port. The WSTA said that these changes represent the biggest tax rise on a standard bottle of wine for approximately 50 years. The association has warned that smaller business will not be able to survive these changes given the added economic pressures of high inflation and increasing supply prices.

WSTA Chief Executive Miles Beale commented:

We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation – especially for food and drink – and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won’t be able to stay afloat, with SMEs most at risk.

NCASS continues to advocate for the independent hospitality sector and the disproportionate impact that these changes may have on independent businesses.. Let us know how these changes will impact you and your business by emailing [email protected].

You can find more information on the alcohol duty changes here and stay up to date with other policy changes here.