On 1 August 2023, the alcohol duty system became much simpler and fairer, taxing all alcoholic drinks based on their alcohol by volume (ABV). I welcome the Government’s commitment to supporting pubs through increasing Draught Relief from 1 August 2023 as announced at Spring Budget 2023. This freezes the duty charged on a typical pint of beer in the pub and ensures this will always be lower than in the supermarket.
I also welcome the Government's decision, as announced at Autumn Statement 2023, to freeze alcohol duties until 1 August 2024 and delay its annual uprating decision to Spring Budget 2024 to give businesses time to adapt to the duty system introduced in August 2023.
All tax categories, such as beer and wine, have been moved to a standardised set of bands, with rates for products between 1.2 and 3.4 per cent ABV, 3.5 and 8.4 per cent ABV, 8.5 and 22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories pay the same rate of duty if they have the same proportion of alcohol content.
Registration and payment have also been simplified, and the practice where individual products have different administrative rules has ended. The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change addresses the problem of harmful high-strength products being sold too cheaply, and the new rates for low-strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.
I welcome the introduction of a new Small Producer Relief, which will build on the previous success of the Small Brewers Relief and benefit cidermakers and other producers of lower ABV drinks. This will allow small producers to diversify their product range to other products below 8.5 per cent ABV while still benefitting from reduced rates.