Alcohol duties in the UK were frozen in the Spring 2024 Budget

Alcohol duties were due to rise by 3% in August, but will now remain frozen until February 2025. While alcohol bodies have campaigned for alcohol duty cuts, they have welcomed the freeze in the face of wider challenges facing the industry.

Wine and Spirits Concerned with Termination of Wine Easements

Miles Bell, chief executive of the Wine and Spirits Trade Association (WSTA), says the UK wine and spirits industry is “breathing a sigh of relief” following the announcement – ​​especially given the introduction of a new alcohol duty regime just six months ago.​

However, he points out that the freeze is only a reprieve and that the wine and spirits trade still has to prepare itself for complex rules: one of which is the end of the wine easement.

“The benefits of the freeze will be short-lived for wine companies who are furious after confirmation that new, diabolically expensive and complex tax rules will come into force from 1 February 2025,” he said.

“Our members have described the changes to wine taxation as ‘unmanageable’ and ‘sheer madness.’ Removing the wine duty easement would increase the price of 75% of red wine sold in the UK.

“The Chancellor and his colleagues at the Treasury should have listened to businesses and maintained a sensible and streamlined procedure for taxing wine. It would be a very costly mistake.”

Ed Baker, managing director of wine and spirits company Kingsland Drinks, said: “The Chancellor’s decision to freeze alcohol duty is welcome and will help ease one of the inflationary pressures punishing the drinks industry.

“While this move will ease pressure in the short term, we urge the Government to adapt to the reality facing all parts of the drinks industry and to continue to listen.

“We also stand united with the WSTA in our frustration with the Chancellor’s decision to remove the easement on wine duty, which will lead to costly red tape, additional complexity and price uncertainty for consumers. We urge the government to look to and listen to the industry on this crucial issue.”

Steve Finlan, chief executive of the Wine Society – the world's oldest wine club and a leading UK wine merchant – said doubling down on the intention to introduce a “ridiculous and convoluted process” for calculating duty rates would be difficult for small businesses.

“It is difficult to see how this new system can be made any more complex. It is difficult for a small company to sell a few hundred wines. For the Wine Association, which has tens of thousands of wines stored in bond, it is close to out of business, and another mountain of Red tape and more costs to the consumer.

The Scotch Whiskey Association also welcomed the freeze on liquor duties, noting that the industry still faces inflation challenges.

Commenting on the Spring Budget, SWA chief executive Mark Kent said: “The industry welcomes the Chancellor’s recognition of the benefits of a continued tariff freeze beyond August this year. This decision supports the Scotch whiskey industry, will stimulate investment and, as with previous cuts and freezes, boost Treasury revenues.” With cost pressures hitting our pubs and pubs, not to mention hard-pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.

However, he says Scotch whiskey is at a disadvantage in the business system: Scotch and other spirits remain the highest taxed category of alcohol in the UK.

“Long-term action is still needed to address the high tax burden on Scotch whisky, which is taxed at a higher rate per unit of alcohol than wine, beer and cider, and faces the highest duty rate on spirits among G7 countries.”

Pubs are facing a lot of challenges despite the liquor duty freeze

The UK has around 38,000 pubs, along with a significant beer industry made up of multinational and craft breweries.

Emma McClarkin, chief executive of the British Beer and Pub Association, says a freeze on liquor duties would be welcomed by brewers, pubs and consumers alike.

But she says the challenges the industry faces are still significant.

“The brewery and pub industry continues to face a £450m cliff edge from spiraling wage costs and business rates increases, particularly those larger or food-led pubs. It is disappointing that the Chancellor has not chosen to go ahead with a tariff cut or a tax cut.” Value Added or capping the increase in the business rates multiplier, which would have helped mitigate the enormous cost of doing business.

“Pressures on our sector remain acute with margins shrinking to the point where we fear another 500 to 600 pubs are likely to close this year on top of the 530 pubs that closed in 2023.”

However, the industry is hoping to benefit from the decision to cut national insurance contributions for all workers by 2p in the pound, which could boost consumer spending.

SIBA – which represents small and independent breweries in the UK – says more could have been done to help beer and pubs.

Andy Slee, SIBA chief executive, said: “The government’s continued support for independent breweries and community pubs through the extended beer duty freeze is a welcome announcement that will help prevent the price of a pint from rising.” More money into people's pockets which is essential to encourage spending in pubs and hospitality

“However, nothing has been done to address the heavy Covid debt the sector continues to carry, and despite the importance of independent pubs and breweries to local communities, they received no direct support in the Spring Budget – with the opportunity to increase the relief project to $20 missed “. % or more which would have strengthened our hospitality sector.

“We are disappointed that nothing concrete has been done to help mitigate the cost tsunami facing our beloved breweries and pubs in the coming months.”