The Stronger the Drink, the Higher the Rate: Radical Changes Coming for tax on Alcohol
The UK government has canceled the planned spirits tax increase and introduced a “radical simplification” of the alcohol taxes system, among other measures revealed in today’s Autumn Budget announcement.
Speaking at the House of Parliament on Wednesday, chancellor Rishi Sunak scrapped the planned duty increase on spirits, wine, cider and beer, a tax cut worth £3 billion ($4.1 billion). The development was welcome news for spirits producers and industry bodies such as the Wine and Spirit Trade Association, which campaigned for the cancellation.
Following the pandemic’s devastating impact on pubs, the chancellor announced a series of changes to alcohol taxes, which will result in some drinks becoming more expensive and others becoming less so. Sunak said that the logic behind the new system was that as drinks get stronger, their rates will go up. So strong red wines, strongly fortified wines and high-strength white ciders will see a slight increase in their rates. But lower-alcohol drinks such as some rosés, fruit ciders and lower strength beers will see a small decrease.
Sunak stated that in February 2023 he would reduce the number of alcohol duty rates from 15 to six. “That’s the biggest cut to cider duty since 1923,” he said. “The biggest cut to fruit ciders in a generation. The biggest cut to beer duty for 50 years. It’s a long-term investment in British pubs of £100 million a year. And a permanent cut in the cost of a pint by 3p.”
Meanwhile, sparkling wines like Champagne and prosecco, which he said were “no longer the preserve of wealthy elites,” will be taxed at the same rate as still wines, ending what he called an “absurd” 28% duty premium.
Emma McClarkin, chief executive of the British Beer & Pub Association, said: “Pubs, brewers and beer drinkers will be toasting the Chancellor today for a range of business-boosting measures. This is great news for our local pubs and recognizes the crucial role they play in our economy and society.”
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