Overhaul of alcohol duty system sparks concerns

Industry bodies have greeted one of the biggest overhauls to Britain’s alcohol duty system with mixed reactions.

The new alcohol duty system, which comes into force from today (1 August), sees an increase in alcohol duty rates to all non-draught products under a revised duty structure in line with the Retail Price Index (RPI), which stands at 10.1%. This includes all alcoholic products produced in, or imported into, the UK. Increases are generally applied on a sliding scale according to strength; i.e the higher the alcohol by volume (ABV), the higher the new duty rate.

British Beer and Pub Association (BBPA) chief executive Emma McClarkin said the new system is a “welcome change” as it “incentivises the production of lower-strength products and nudges consumers towards them”. She added the Draught Relief, which has cut the alcohol duty of draught beer and cider by 9.2%, is also positive.

However, the tax placed upon packaged beer, as of today, has increased by 10.1%. This will increase the price of a 24 pack of 330ml 4.5% lager by £0.69p per case. McClarkin said this tax increase will impact on both breweries and pubs, with the industry shouldering an extra £225m of costs per year.

She said brewers “don’t just supply draught products” but also packaged beer in bottles and cans which pubs offer. She added: “The 10.1% duty increase will have a huge impact, and overall will likely lead to costs going up across the whole category.”

The Scottish Licensed Trade Association (SLTA) similarly cautioned the changes could have serious implications for independent pub and bar owners.

Paul Waterson, SLTA spokesman, said: “We are not convinced that this change in draft beer and cider duty will help us or our customers in any way. For the Chancellor to say this cut in draft beer duty is a ‘Brexit Pub Guarantee’ is as naïve as it is fanciful.”

Waterson added that operators will not benefit from any cuts to alcohol duty “because the duty is paid by producers, who do not adjust their prices down” when selling to SLTA’s members and stakeholders.

Meanwhile, the Night Time Industries Association (NTIA) said it “strongly condemns” the introduction of the new tax system, claiming the tax might see a potential increase in business closures, adding that cost increases will ultimately fall on consumers, therefore “impacting their ability to enjoy social experiences and culture”.

It added “[the] arbitrary alcohol duty increase and structure fails to consider the broader implications for the night time economy and its stakeholders”.