Alcohol duty rise delayed until August to help struggling pubs and breweries

A freeze on alcohol duty rates has been extended by six months to August 2023 in a bid to give the hospitality industry a boost.

Exchequer Secretary to the Treasury James Cartlidge said the plan aims to provide certainty to pubs, distilleries and breweries as they face a challenging period ahead.

In a statement to the House of Commons this evening, he said: "Pubs, cidermakers, distilleries and winemakers have a historic place at the heart of our communities.

"They provide not only thousands of jobs, but hubs that enrich and often define the social fabric of our villages, towns and cities.

"By saying to the industry that they will face just one single industry-wide change next summer, rather than two or more over the course of the year, we are giving maximum certainty to industry."

While new duty rates normally come in on February 1 each year, Mr Cartlidge set out that the decision will be held until Chancellor Jeremy Hunt delivers his Spring Budget on March 15 next year.

Even if any changes are announced, they will not take effect until August 1 - aligning with the date significant reforms to the alcohol duty system come in, while giving the industry more time to prepare.

Mr Cartlidge said: “Today’s announcement reflects this government’s commitment to responsible management of the UK economy and supporting hospitality through a challenging winter. "We have listened to pubs, breweries and industry reps concerned about their future as they get ready for the new, simpler, alcohol tax system taking effect from August. "

The current alcohol duty freeze was announced at Autumn Budget 2021, with the aim of saving consumers over £3 billion in five years.

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It was expected to come to an end on February 1, 2023, following the Chancellor’s reversal of most of September’s Growth Plan to restore trust in the economy and strengthen public finances.

During the 2021 Autumn Budget, the government announced the widest reforms to alcohol duty in 140 years, overhauling many rules following the UK's departure from the EU.

The new system sets out to take a more simple approach, where the higher a drink's strength, the higher the duty, while new tax reliefs will be made available to help pubs and smaller producers.

Until now, there was a cliff-edge which saw relief withdrawn from brewers who make more than 5,000 hectolitres a year.

The new system will see a gradual taper to the removal of relief, which will incentivise smaller breweries to grow.

The expansion of relief means that all producers that make drinks below 8.5% – mostly craft brewers and cidermakers – 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. 

The wine industry will also be supported as they adapt to the new system. All wine between 11.5-14.5% alcohol by volume (ABV) to calculate duty as if it were 12.5% ABV for 18 months from the implementation of the new system.

Welcoming the decision to extend the freeze on duty, British Beer and Pub Association chief executive Emma McClarkin said: "In 2022 our industry has faced pressures and challenges like never before. “This freeze will allow £180 million to be reinvested into our sector at a critical moment and inject a much-needed flurry of festive cheer for pubs and breweries.

"It shows the Government understands just how much our pubs and brewers mean to communities across the UK.”

But Labour's shadow treasury minister Abena Oppong-Asare told the Commons it is "laughable" to announce a six-month extension in the name of certainty.

She said: “We should call it what it is: it is a U-turn. The previous chancellor announced a freeze, the current Chancellor scrapped it, and now it’s back on. How did we get here?” “So, we see again the Government has no long-term plan for the British economy. They cannot provide the certainty businesses and their hard-working employees need to plan for the tough winter ahead. They have left businesses and consumers out in the cold. “They may not want to hear this, but this is the reality. They’re unsure what regulatory systems will be in place in as little as two months. Two months. “Today, Labour has found that more than 70,000 venues have had to reduce their opening hours due to the price of energy bills. 70,000 venues.

"That is almost a third of pubs, bars and hotels missing out on customers at the busiest, most profitable time of the year.”