The Chancellor of the Exchequer has unveiled plans to completely overhaul the UK’s alcohol duty system.
Rishi Sunak revealed plans for a huge shake-up of alcohol duty during his Budget speech in the House of Commons today (27 October), with a package of changes he called “the most radical simplification of alcohol duties for over 140 years”.
This will include slashing the number of main duty rates from 15 to six, with a new system designed around “a common sense principle – that the stronger the drink, the higher the rate”, he said.
This meant some drinks like stronger red wines and high-strength ciders, which he said were “undertaxed given their strength”, would see an increase, ending “the era of cheap, high-strength drinks”.
Many lower-alcohol drinks, meanwhile, were “currently overtaxed and have been for many decades”, he added. “Today’s changes mean they will pay less.”
Duty will be cut on fruit ciders and crucially, sparkling wines, which he called “no longer the preserve of wealthy elites”, so that producers will pay the same duty as still wines of equivalent strength. Until now, they have paid a higher premium.
Because growing conditions in the UK favoured lower-strength and sparkling wines, this would be a boon for homegrown producers, Sunak suggested.
English wine supplier Chapel Down CEO Andrew Carter welcomed the news, saying it would “enable the industry to create jobs, support families, and bring even more young talent into this exciting, developing sector as it recovers from the pandemic”.
“The English wine industry – comprising 3,800 acres under vine, 800 vineyards, 178 wineries – is expanding rapidly and governmental support provides the opportunity to build English wine on a global level,” he said.
The government will also extend the principle of small brewers relief to other categories of booze, Sunak revealed, including cidermakers and other suppliers making drinks of less than 8.5%.
The new rates will kick in from February 2023.
Meanwhile to “support the home of British community life” a 5% duty cut for draught beer in containers of 40 litres or more will be implemented, which Sunak called a “long-term investment” in British pubs.
To “help the hospitality industry right now”, he added, planned increases in duty on spirits, wine, cider and beer would all be cancelled.
The cut on draught beer was met with a mixed response from the Society of Independent Brewers, whose CEO James Calder said it would be “hugely beneficial for producers of real ale, which is sold in forty litre casks”, but not most craft brewers.
“Most craft keg beer in the UK is sold in thirty litre kegs, meaning they cannot benefit.”
He called for the government to amend this threshold to twenty litres to “ensure all independent breweries benefit from this welcome new duty relief on draught beer”.
Wine & Spirit Trade Association CEO Miles Beale called the plans “a huge relief to British businesses, the hospitality sector – including its supply chain - and consumers, giving everyone a much-needed break to help them recover from the pandemic”.
“By offering continued respite to the UK wine and spirit sector his actions will help save jobs and - in time – replenish revenues to the Treasury through growth in our potential-filled sector.”
A consultation on the changes has been launched and will close on 30 January 2022.
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