Many alcoholic drinks will now cost more as a new alcohol duty has been introduced by UK Prime Minister Rishi Sunak and Chancellor Jeremy Hunt on August 1st.
The new duty system will impose taxes on all alcoholic beverages based on their alcohol by volume (ABV) content, moving away from the previous approach that taxed them according to the type of alcohol.
Nevertheless, the increases will result in a reduction of duty on numerous alcoholic beverages found on supermarket shelves, such as bottles of pale ale, pre-mixed gin and tonic, and prosecco.
The new tax regulations will implement reduced taxes on low-alcohol products, specifically those with an alcohol by volume (ABV) below 3.5%. Additionally, all beverages with an ABV above 8.5% will be subjected to a uniform tax rate, irrespective of their type.
In a news release, the previous duty system was described as “complex and unfair”. The new system, however, is said to “support wider UK tax and public health objectives”.
Prime Minister Rishi Sunak said, “I want to support the drinks and hospitality industries that are helping to grow the economy and the consumers who enjoy the end result. Not only will today’s changes mean that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.”
He added, “We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs”.
The government is also introducing ‘Small Producer Relief’, which replaces and extends the previous Small Brewers Relief scheme, which was introduced to reduce rates of beer duty for small brewers.
Under this scheme, small enterprises producing alcoholic products with an alcohol by volume (ABV) of less than 8.5% can avail reduced rates of alcohol duty for eligible items. This initiative is designed to offer small producers the financial flexibility to explore new beverage varieties and expand their business.
Barry Watts, head of policy and public affairs at Society of Independent Brewers, commented, “These are the most significant changes to the alcohol duty system for generations which will have far-reaching implications for what we order in the pub and what appears on the shop shelves. It is the culmination of five years of consultation on the future of Small Breweries’ Relief – a scheme that has made the huge growth of craft breweries possible over the past twenty years.
“These changes will finally address the ‘cliff edge’ which was a barrier to small breweries growing and build on the scheme’s success by applying it to other alcoholic products below 8.5%.”
