The government has announced plans to freeze alcohol duty for a further six months. The Treasury said late yesterday (December 19) that while new duty rates were scheduled to come in on February 1, the revised date of August 1 will now align with duty reform plans.
Exchequer secretary to the Treasury, James Cartlidge, said further decisions on duty rates will be held until chancellor Jeremy Hunt delivers his Spring budget on March 15. The minister said if any changes to duty are announced then, they will not take effect until August 1.
“The alcohol sector is vital to our country’s social fabric and supports thousands of jobs – 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,” said Cartlidge. “That’s why we have acted now to give maximum certainty to industry and confirmed there will be just one set of industry-wide changes next summer.”
Industry bodies welcomed the decision. Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “We are extremely pleased to hear that the chancellor has listened to our calls not to deliver a double whammy tax hike next year. History has shown that freezing alcohol duty delivers increased revenue to the Exchequer. If duty rates went up by RPI on February 1, this would have been a crippling blow to the UK alcohol industry and consumers who would have to pay the price for tax rises.”
He said that delaying any increase until August 1 means businesses will not have to manage two duty rises in the space of six months.
“We hope that any duty increases applied in August take into account the damage suffered by wine and spirit businesses and the hospitality sector during the pandemic. We are calling on Jeremy Hunt to cancel double digit tax rises to help cash-strapped consumers and to support the UK’s world-class drinks industry.”
Emma McClarkin, chief executive of the British Beer and Pub Association joined Beale in welcoming the announcement.
“In 2022 our industry has faced pressures and challenges like never before,” she said. “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.
“We look forward to working with the government to implement the promised duty reforms in 2023 ensuring a fair and modernised rates system in the UK that support lower-strength products and our country’s pubs.”
And while the Society of Independent Brewers national chairman Richard Naisby also welcomed the news, he said that with breweries “facing pressure from every direction and energy costs spiralling we would urge the government to go further to ensure the number of breweries in the UK doesn’t continue to decline”.
He added: “Independent brewers would like to see the new draught beer duty relief increased from 5% to 20% when it is introduced next summer to give our struggling pub industry a shot in the arm, as well as continued support for independent breweries under the energy bill relief scheme.”
The news is the latest in a series of U-turns on alcohol duty – Hunt had previously announced that prices would rise in February, reversing a decision made by predecessor, Kwasi Kwarteng.