Chancellor Rishi Sunak has announced a raft of changes to alcohol duties that he promised will bring the cost of a pint in the pub down by 3p “permanently”.
Alcohol will now be taxed on the basis of its strength rather than the current system, which has been in place for decades and which the Institute of Fiscal Studies called “a mess”.
Mr Sunak said the new steps for alcohol duty will make it “simpler, fairer and healthier”.
Follow live reaction to the budget
Budget announcements on alcohol, fuel and Universal CreditThe changes, which will take effect from 1 February 2023, are:
Advertisement• The number of duty rates on alcoholic drinks will be cut from 15 to six – “the stronger the drink, the higher the rate”, Mr Sunak said
• All drinks above 8.5% ABV will pay the same rate of duty – so rose will come down by 23p per bottle while strong beer will be more expensive
More on Budget 2021 Related Topics: Budget 2021Rishi Sunak• Fruit ciders and low alcohol spirit drinks, such as G&T in a can, below 3.5% ABV will have lower rates
• A new Small Producer Relief will give tax reliefs to small brewers and distillers of beer, cider (for the first time) and other alcoholic drinks less than 8.5% ABV
• Sparkling wine’s 28% premium duty will be cut so it is the same as still wine of equivalent strength
• Draught relief – a lower rate of duty on draught beer and cider from containers over 40 litres, with a cut of 5%
• An alcohol duty rate rise will be cancelled from Wednesday
Image: Draught pints will be 3p cheaper ‘permanently’, Rishi Sunak saidHow much will your favourite drinks be?
• Pint of Stella Artois: £3.80 (-3p in pub, no change in shop)
• Pint of Magners: 71p for can in shop, £3.50 pint in pub (-0.5p in shop, -2p in pub)
• Kopparberg strawberry and lime: £1.65 for bottle in shop, £3.80 pint in pub (1p less in shop, 13p less in pub)
• Campo Viejo Rioja Gran Reserva (13.5% ABV): £16 for bottle in shop (47p more)
• Blossom Hill rose (11%): £8 for bottle in shop (12p less)
• Plaza Centro prosecco (11%): £7 for bottle in shop (87p less)
• Chapel Down English sparkling wine: £18 for bottle in shop (64p less)
• Taylor’s port (20%): £15 for bottle in shop (£1.09 more)
• Famous Grouse whisky (40%): No change in shop
• Gordon’s pink gin and tonic can (5%): £1.80 in shop (9p less)
• Aperol (11%): £15 for bottle in shop (26p less)
Image: The changes have been welcomed by English wine producersThe changes in alcohol duties have also been accompanied by business rate cuts and freezes for hospitality, including a 50% business rates discount up to a maximum of £110,000.
The changes have been largely welcomed by the drinks industry and investors, with Wetherspoons shares rising by 5% on the announcement, Young and Co’s up by 2% and Marstons, the largest independent brewer, up by 5%.
Emma McClarkin, chief executive of the British Beer and Pub Association, said pubs, brewers and beer drinkers “will be toasting the chancellor today”.
She said freezing beer duty instead of increasing it will save £177m and secure 9,000 jobs across the UK and the 5% lower duty rate on draught beer is worth £62m.
“However, the overall beer duty rate in the UK remains amongst the highest in Europe,” she said.
And she said the cap of £110,000 on the business rate discount is “a huge dampener and means a significant number of pubs will not benefit from the relief at all”.
Image: English and Welsh wine producers will benefit from the changesAndrew Carter, chief executive of Chapel Down, which makes English sparkling and still wine, said the changes for wine are “the best endorsement we could hope for” and the duty saved will create jobs and bring more young talent to the English wine industry.
The Society of Independent Brewers (SIBA) called the streamlining of the individual duties “radical” and said it created a “more level playing field between small breweries and cider producers”.
“The lower rate of duty for beer sold in pubs is a huge win for the industry and something which SIBA has been campaigning for,” James Valder, SIBA chief executive said.
He added that the freeze in alcohol duty is “very helpful” at a time when brewers are seeing an increase in supply and running costs.
