There will be no changes to UK alcohol duty this February, after the government announced an effective six-month extension to its freeze on the tax.
The current freeze, announced in the autumn budget 2021, was set to end on 1 February 2023. However, any decision over whether to set new duty rates will now be held until Chancellor Jeremy Hunt’s spring budget on 15 March 2023, with any changes not coming into effect until 1 August.
“We have acted now to give maximum certainty to industry and confirmed there will be just one set of industry-wide changes next summer,” James Cartlidge, exchequer secretary to the Treasury, told the Commons on Monday.
Industry figures welcomed the extension.
“History has shown that freezing alcohol duty delivers increased revenue to the Exchequer,” said WSTA CEO Miles Beale. “If duty rates went up by RPI on 1 February, this would have been a crippling blow to the UK alcohol industry and consumers, who would have to pay the price for tax rises.”
Nuno Teles, MD of Diageo GB, said the extension represented a “much-needed Christmas present” for the UK’s pubs, bars and restaurants.
“Today’s news provides much-needed certainty for the sector and we raise a glass of Guinness to the Chancellor and the PM in thanks,” Teles said.
The decision to delay any new changes until 1 August, coincides with the beginning of the government’s new simplified alcohol tax system.
The reforms, first announced by then Chancellor Risk Sunak in October 2021, aim to streamline the existing framework, and include a reduction of the number of total rates from 15 to six, as well as introducing a more ”common sense” approach that more closely aligns the duty paid to a drink’s alcohol content.
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