Six-month extension to alcohol duty freeze

The freeze to UK alcohol duty rates has been extended by six months to 1 August 2023.

The move comes after the chancellor Jeremy Hunt said the government would no longer be freezing alcohol duty rates from 1 February 2023 for a year.

However, the government says a new six-month extension aims to reassure and provide certainty to pubs, breweries and distilleries facing tough challenges ahead.

The revised end date aligns with a new simpler alcohol tax system taking effect, with the chancellor reserving the decision on future duty rates for the Spring Budget 2023, which will take place on 15 March.

“The chancellor’s decision to extend the freeze on alcohol duty is great news for the industry and recognises the vital role that pubs play at the heart of communities," says Nick Mackenzie, chief executive of Greene King. “This announcement is welcome and will do much to support our pubs and tenants through a challenging winter as the sector continues to face severe cost pressures. However, we urge the government to keep its promise to modernise the alcohol duty system so it is fairer for pubs and supports lower-strength products. Fundamental reform is long overdue and will open up investment in the sector, enabling pubs to continue to support communities up and down the country.”

New alcohol tax system

At the Autumn Budget 2021, the government announced the biggest reforms to alcohol duty in 140 years. 

The new alcohol tax system will adopt an approach where the higher a drink’s strength, the higher the duty, while new reliefs will be made available to help pubs and small producers thrive.

Draught Relief, according to the government, will be worth £100m a year. The threshold for qualifying containers will be 20 litres.

Small Brewers Relief will be renamed Small Producer Relief. Until the revamp, relief is withdrawn for brewers who make more than 5,000 hectolitres a year. There will instead be a gradual taper to the removal of relief. The expansion of the relief means that all producers that make drinks below 8.5% will be able to get relief on their products.

Higher rate for sparkling wines will come to an end, meaning they will pay the same rate as still wine. Liqueurs will be put on the same footing as fortified wine, meaning a sherry and Irish Cream will now pay the same duty, and super-strength ‘white cider’ will rise to address public health concerns.

All wine between 11.5% and 14.5% ABV will calculate duty as if it were 12.5% ABV for 18 months from the implementation of the new system.

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