The chancellor has frozen alcohol duty until February 2025.

As part of the Spring Budget announcement, Jeremey Hunt said the freeze on duty, which was due to end this August, will be extended to next February. However, the government is still planning to go ahead with scrapping the temporary easement to wine duty.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said the wine and spirit sector will be relieved that the chancellor has spared them a further duty hike.

“This will help to keep price rises down for consumers for a period,” he said. “Six months ago, alcohol duty was subjected to the largest increase in almost 50 years. Those tax increases fuelled inflation and had a negative impact on sales, which in turn has seen Treasury lose around £600 million in alcohol revenue. We are pleased that Government has now recognised that duty hikes are bad for businesses, bad for consumers and bad for the Exchequer.”

However, he went on to say that the benefits of a freeze will be short-lived for wine businesses who are “fuming after confirmation that costly and fiendishly complex new taxation rules will come into force from 1 February 2025”.

According to the WSTA, the exchequer secretary, Gareth Davies MP, confirmed at a Westminster Hall debate (yesterday) that government plans to go ahead with complex and costly changes to the way wine is taxed.

“The changes to taxing wine have been described as “un-administrable” and “sheer lunacy” by our members,” Beale said. “Scrapping the easement for wine duty will see price increases for 75% of red wines sold in the UK. The chancellor and his Treasury colleagues should have listened to businesses and kept in place the sensible, simplified procedure for taxing wine. It’s going to be a very costly mistake.

“The announcement that the freeze will last only until February is also a source of irritation for businesses. The recent pattern of raising alcohol duty at the Spring Budget and the Autumn statement is very unsettling for the industry. We need to go back to one announcement a year to give businesses certainty.”

Steve Finlan, CEO of the Wine Society, expressed disappointment over the plans to scrap the easement for wine duty.

 “We are extremely disappointed that, yet again, government has failed to listen to business,” he said. “Following the disastrous increase in wine duty last year, which has resulted in hundreds of millions of lost revenue to the Treasury and placed further strain on the wine trade; to double down with the intention of introducing a ludicrous and complex process for calculating duty rates shows just how tone deaf they have become.

“It is hard to see how this new system could be made any more complicated. It is tough for a small company with a few hundred wines to sell. For The Wine Society with tens of thousands of wines stored in-bond, it is close to unworkable, yet another mountain of red tape and more costs for the consumer to bear.”

Meanwhile, Scotch Whisky Association chief executive Mark Kent welcomed the chancellor’s recognition of the benefits of continuing the duty freezes beyond August this year.

“That decision supports the Scotch whisky industry, will incentivise investment and, as with previous cuts and freezes, boost Treasury revenue. With cost pressures hurting our bars and pubs, not to mention hard pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.”  

Stephen Russell, founder of Copper Rivet Distillery and spokesperson for the UK Spirits Alliance also called the freeze “good news”, though he added: “Spirits continue to be the highest taxed alcohol category in the UK – most people are shocked to hear that 80% of a bottle of gin is tax. We have the highest spirits duty rate among G7 nations, despite being a national success story. We look forward to engaging with HM Treasury on how we improve this.”

In the beer world, Emma McClarkin, chief executive of the British Beer and Pub Association, called the freeze good news for brewers, pubs and consumers, but she warned that the hospitality trade is on a “cliff edge”.

“This April brewers and pubs still face a £450 million cliff edge of spiralling wage costs and business rates increases, particularly those pubs that are larger or food-led,” she said. “It is disappointing that the chancellor did not choose to go further with a cut duty, reduce VAT or cap the increase to the business rates multiplier which would have helped mitigate the huge cost of doing business.  Pressures on our sector remain acute with margins being squeezed to the point where we fear it is likely that a further 500-600 pubs are likely to close this year on top of the 530 that closed in 2023.  No government should turn a blind eye to the erosion of such an integral economic, social and cultural asset and it is vital that at the election the political parties commit to putting in place a fiscal and policy framework that will see our sector thrive for the long term and not continue to deteriorate.

“We very much hope that the decision to cut National Insurance contributions for all workers by 2p in the pound will boost consumer spending power and encourage people to enjoy an extra pint in their local, but I urge the Government to look again at the urgent measures needed to make the cost to doing business more affordable at the next fiscal event and through policy commitments made in the run up to the election to truly back the British Pub.”

Last month, the Wine and Spirit Trade Association (WSTA) urged the chancellor to cut alcohol duty, after HMRC figures showed losses of £600 million to Treasury coffers.