Frustration and relief as UK Treasury delays alcohol duty reform

The Treasury has confirmed that its announcement concerning the outcome of the review on alcohol duty would not be made until autumn, dividing the industry.

The consultation ran from October 2021 to January 2022 in order to devise a simplified approach which was: “…more economically rational and less administratively burdensome on businesses and HMRC.” Then-Chancellor Rishi Sunak unveiled his proposals in last year’s Autumn Statement.

No specific reason for the delay has been given, though it can be viewed in the context of the current uncertainty surrounding the next government and next Chancellor.

One proposal was the so-called ‘Draught Relief’. This would be a 5% cut on the duties on beer and cider dispensed from containers which were 40 litres or larger.

In reaction to the set back, CAMRA CEO Tom Stainer said: “…introducing the new system of alcohol taxation designed to give pubs, social clubs and taprooms support through a new preferential rate of duty charged on beer and cider served on draught compared to the likes of supermarket alcohol is so important”.

UK Hospitality CEO Kate Nicholls stated: “This delay is incredibly disappointing for the pubs and hospitality. With the sector and its customers facing soaring costs, we needed to see positive action on lower duty rates for draught beer and cider.”

Nicholls continued, concluding with a call to action: “The new Government must make this legislation, which is already agreed policy, a priority in early September so we can deliver benefits to pubs, the wider hospitality sector and, crucially, consumers. The economic advantages are clear for the Treasury, so it is time to act.”

Nicholls’ disappointment was shared by British Beer and Pub Association CEO Emma McClarkin: “[This] will come as a blow to pub and brewing business who have been waiting on an announcement since this year’s Spring Statement. We urge any new government to keep these reforms on track.”

However, not every drinks body expressed anger about the delay. Wine & Spirits Trade Association CEO Miles Beale called it: “a welcome and sensible pause”.

Beale explained: “With inflation continuing to climb to its highest rate for 40 years we hope that by working with the new Treasury team we can ensure that this once in a lifetime chance to reform the system does not add to consumer misery and bring with it higher prices and less consumer choice.”

A statement from WSTA in March called for a “level playing field”. The organisation deems the proposals to turn three bands of duty into 27 to be particularly unfair to wine and spirits, which would have higher duties due to having a higher ABV, with the latter being taxed at 29p per unit. Instead, WSTA is advocating for two bands taxed at their midpoint.

The Scotch Whisky Association also criticised Sunak’s proposals to tax spirits 51% more per unit than beer, or up to 59% compared to draught beer: “[it would make] an unfair system even worse for Scotland’s national drink.”

db has reached out to UK wine industry body Wines of Great Britain to ascertain its perspective on the delayed announcement.