Alcohol Duty
Alcohol Duty overhaul now in effect
The UK government has completed an overhaul of the Alcohol Duty system which sees all alcoholic drinks taxed based on their alcohol by volume (ABV).
August 2023 saw the implementation of a new Alcohol Duty system which means that all alcoholic drinks are now taxed based on their alcohol by volume (ABV), with drinks with a higher alcoholic percentage subject to higher rates of duty.
The reform was first announced in the Spring Budget earlier this year following freezes on alcohol duty which were implemented last year.
The new system creates six standardised alcohol duty bands across all types of alcoholic products and apply to all businesses involved in the manufacture, distribution and sale of alcoholic products across the UK.
Lower-strength drinks below 3.5% ABV are now charged at a new lower rate of duty to “encourage the growth of health-conscious consumption”.
As part of the reform, the Government is implementing a reduced rate for draught products to “recognise the vital role played by pubs in our communities”.
Draught Relief will reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade venues.
According to the Government, the reform means that every pint in every pub across the UK will pay less duty than their supermarket equivalent, in line with the government’s Brexit Pubs Guarantee.
Wine will be taxed incrementally, by 0.5% ABV, between 11.5% and 14.5%. However, these changes will not come into play until 1st February 2025.
In the meantime, temporary arrangements will be in place for 18 months from 1st August which see all wines between 11.5% and 14.5% ABV taxed as if they are 12.5% in strength — a temporary duty increase of £0.44 per 75cl bottle. After 1st February 2025, wines will be split into sub-categories with differing duty rates.
Sparkling wines are now being aligned with still wines in terms of duty payable, effectively reducing the cost of these products.
New Alcohol Duty System
Alcoholic strength of alcoholic product VS Rate of duty per litre of alcohol in the product:
Less than 1.2% – £0
At least 1.2% but less than 3.5% – £9.27
At least 3.5% but less than 8.5% – See Exemptions Table
At least 8.5% but not exceeding 22% – £28.50
Exceeding 22% – £31.64
Exemptions
For products of at least 3.5% but less than 8.5%, the following rates of duty per litre of alcohol in the product apply:
Still cider or Sparkling cider of an alcoholic strength
not exceeding 5.5% – £9.67
Beer – £21.01
Spirits, wine, and other fermented products; or sparkling cider of an alcoholic strength exceeding 5.5% – £24.77
