More than 38,000 UK pubs and bars have seen a tax cut on the pints they pull from now on as the duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket.
The changes are designed to help pubs compete on a level playing field with supermarkets, so they can continue to thrive at the heart of communities across the UK. The Brexit Pubs Guarantee announced in the Chancellor’s Spring Budget secures the pledge that pubs will always pay less alcohol duty than supermarkets going forwards.
It comes as other landmark changes to the alcohol duty system also come into effect today, which see drinks taxed by strength for the first time and a new relief – named Small Producer Relief – to help small businesses and start-ups create new drinks, innovate and grow.
The changes have automatically lowered the duty in shops and supermarkets on many of the UK’s favourites including certain bottles of pale ale, pre-mixed gin and tonic, hard seltzer, Irish cream, coffee liquor and English sparkling wine, amongst others.
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.”
The lower alcohol tax for draught beer result from the expansion of Draught Relief, which effectively freezes or cuts the alcohol duty on the vast majority of these drinks. The government has pledged that the duty pubs and bars pay on these drinks will always be less than retailers, known as the Brexit Pubs Guarantee.
This tax reduction is part of a wider shake up of the alcohol duty system which also comes into effect from today – the biggest in 140 years.
The key changes are:
- all products taxed in line with alcohol by volume (ABV) strength, rather than different duty structures for different drinks
- fewer main duty rates, from 15 to 6, to make it easier for businesses to grow and operate
- there will be lower taxes on lower alcohol products – those below 3.5% alcohol by volume (ABV) in strength – a huge growth area in the drinks industry
- all drinks above 8.5% ABV will pay the same rate regardless of product type
The UK alcoholic drinks market reached just under £50 billion in 2022, up 6% year on year and is expected to continue to grow – sales are forecast to reach £60.9 billion in 2026. The UK government is laser-focused on continuing this burgeoning success.
The government is introducing Small Producer Relief effective from today, which replaces and extends the previous Small Brewers Relief scheme.
This allows small businesses who produce alcoholic products with an ABV of less than 8.5% to be eligible for reduced rates of alcohol duty on qualifying products. The new tax relief scheme promotes innovation in the drinks sector, giving small producers the financial freedom to experiment with new types of drink and grow their business. It also supports the modern drinking trend of lower alcohol beverages.
Barry Watts, Head of Policy and Public Affairs, Society of Independent Brewers, said: “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%.
“A key part of the new system is the draught duty relief is a gamechanger for the sector and allows for the first time a different duty to be paid for what is sold to our pubs. This will hopefully over time encourage more people to support their pub which is at the heart of our local communities.”
