Changes to Alcohol Duty Rates and Draught Relief Coming into Effect on August 1, 2023
The UK government has announced significant changes to the duty structure for alcoholic products as part of the Spring Budget 2023. From August 1, 2023, individuals and businesses involved in the manufacture, distribution, holding, sale, and consumption of alcoholic products will witness an increase in the duty rates. This alteration is in line with the Retail Price Index (RPI) and applies to all alcoholic products produced in, or imported into, the UK.
The government is also set to increase the value of Draught Relief from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, other fermented products, and spirits. This change is part of the government's ongoing support for the hospitality industry and recognises the vital role pubs play in the community.
Alcohol Duty rates have been frozen since the Autumn Budget 2020. However, the government extended this freeze by six months until August 1, 2023, to provide businesses with certainty during a tumultuous economic period. While the public finances typically anticipate an RPI increase each February, the government has introduced several cuts or freezes to alcohol duties over the past decade.
Under the new legislation, all alcoholic products less than 3.5% ABV will carry a duty of £9.27 per litre of alcohol in the product. Other revised rates include £21.01 for beer with an ABV of at least 3.5% but less than 8.5%, and £31.64 for all alcoholic products exceeding 22% ABV.
Draught Relief will also be introduced under the new legislation, reducing the duty on qualifying draught products. For instance, the reduced rate of duty on all draught alcoholic products less than 3.5% ABV will be £8.42 per litre of alcohol in the product.
While these changes may directly impact consumers if the altered duty rates result in price adjustments, the government anticipates that the increase in Draught Relief will encourage more supervised drinking in licensed premises, thereby supporting the hospitality sector.
Those with questions about the new duty structures are advised to contact the Excise and Customs Helpline.