WHAT IS CHANGING?
As announced in the Spring Budget on the 15th of March, the UK government will increase alcohol duty rates in line with the Retail Price Index (RPI), effective from the 1st August 2023.
This new legislation will see all alcoholic drinks moved to a system where they are taxed based on their alcohol by volume (ABV), replacing the current system of four separate tax categories covering beer, spirits, cider and wine.
Alcohol duty rates in the UK have remained frozen since Autumn 2020, however, under the new legislation, duty will change to reflect the strength of the product.
The measure will also introduce two new duty reliefs: Small Producer Relief, which reforms and extends the relief currently enjoyed by small breweries, to all producers of other alcoholic products under 8.5% ABV. And Draught Relief, which will reduce the tax burden on draught alcoholic products sold in on-trade venues. The relief will provide a reduced rate of duty on draught alcoholic products under 8.5% ABV, packaged in containers of at least 20 litres.
|
|
Current Duty |
Duty from 1st Aug |
Difference |
% Change |
|
Vodka 37.5% abv 70cl |
£7.54 |
£8.31 |
£0.76 |
10 |
|
Sparkling Wine 12% abv 75cl |
£2.86 |
£2.67 |
-£0.19 |
-7 |
|
Still Wine 12.5% abv 75cl |
£2.23 |
£2.67 |
£0.44 |
20 |
|
Sherry 15% abv 75cl |
£2.23 |
£3.21 |
£0.97 |
44 |
|
Port 20% abv 75 cl |
£2.98 |
£4.28 |
£1.30 |
44 |
|
Spirit-based Cream Liqueur 17% abv 70cl |
£3.42 |
£3.39 |
-£0.03 |
-1 |
|
Pre-Mixed G&T 5% abv 250 ml |
£0.36 |
£0.31 |
-£0.05 |
-14 |
|
440 ml can cider 4.5% (off trade) |
£0.18 |
£0.19 |
£0.01 |
8 |
|
Pint cider 4.5% on-trade (draught) |
£0.23 |
£0.22 |
-£0.00 |
-2 |
|
440ml can beer 4.5% (off trade) |
£0.38 |
£0.42 |
£0.04 |
10 |
|
Pint beer 4.5% on trade (draught) |
£0.49 |
£0.49 |
-£0.00 |
-1 |
(WSTA Press Release 15.3.23)
WHY ARE THESE CHANGES HAPPENING?
The change in legislation aims to simplify the current, outdated taxation process by creating standardised tax bands based on ABV, and to create a fairer system for new products entering the market.
By making these changes, the government also aims to support public health, encourage product innovation, and ensure the duty system reflects modern drinking practices.
HOW WILL THIS IMPACT YOUR BUSINESS?
It is unavoidable that operators will incur price increases that have been passed on through their distributors, which will then be passed onto the end consumer.
The government predicts that the increase in alcohol duty rates could lead to a minor decrease in overall alcohol consumption in the UK. However, the government is hopeful that the new Draught Relief will have a positive impact on the hospitality sector, as it aims to promote drinking in supervised venues which are less associated with alcohol harm, such as pubs, bars and restaurants.
HOW CAN WE HELP?
We understand that these changes will inevitably have a profound impact on our customers, just as they will our own business and the wider hospitality industry.
As always, your LWC Account Manager is on hand to provide as much information as you need, and to support you with a smooth transition to the new system.
For more information on these changes and how they will impact the industry, please visit the government website: https://www.gov.uk/government/collections/alcohol-duty
For information of LWC-specific changes, please visit our website: https://www.lwc-drinks.co.uk/duty-change-2023/