On the 19th of December, the Exchequer Secretary to the Treasury, James Cartlidge, laid out plans to extend the alcohol duty freeze in line with reforms taking place in August 2023.

In the 2021 Autumn Budget, the government announced the current freeze on alcohol duty, expecting to save consumers £3 billion over 5 years. This freeze was initially supposed to end on the 1st of February, but has now been extended by six months until the 1st of August. In his statement to the House of Commons, Cartlidge made it clear that future duty rates are set to be decided by the 2023 Spring Budget, but reassured that these won’t take effect until the freeze ends. 

The extension and reformation of alcohol duty comes as part of the government’s commitment to a more responsible management of the UK economy. Looking forward, the government hopes to provide alcohol-related businesses more certainty so they are able to plan and make investment decisions more effectively. 

The reforms to alcohol duty are the most significant in 140 years, hoping to overhaul the outdated rules by radically simplifying them. The new system will operate on a more common-sense based approach, where drinks with higher alcohol strengths will have higher duties. Within this, there will be new reliefs made available to support the growth of pubs and other small producers. 

New reliefs under the alcohol duty reform

The New Draught Relief threshold for qualifying containers will be 20 litres, and is expected to be worth £100 million per year. This will ensure that smaller craft producers can benefit from the relief. 

The Small Brewers Relief is set to be renamed Small Producer Relief as it is reformed and expanded. There will be a more gradual taper to removal of relief, empowering small breweries to grow. At present, the relief is withdrawn for brewers who make more than 5,000 hectolitres a year, so the introduction of a gradual removal will be welcomed. By expanding this relief, producers of drinks below 8.5% will also be able to get relief on their products. 

It is expected that the reform of alcohol duty will create a simpler, fairer and healthier duty system, as the higher rate for sparkling wines ends. Liqueurs will also be on the same rate as fortified wine, so that sherry and Irish Cream will now be on the same duty. Addressing public health concerns, super-strength ‘white cider’ will be put on a higher duty. Not only these, but the wine industry will be supported for 18 months from the introduction of the new system, with the duty for wines between 11.5-14.5% calculated as if they were 12.5%.

For further clarification please do not hesitate to contact chris.barlow@gwcox.co.uk