The cost of your alcoholic drinks, cigarettes and fizzy pop are all set to change after the Spring Budget announcement.
Chancellor Jeremy Hunt yesterday delivered his Spring 2023 budget, announcing a number of steps the government will take to improve economic stability.
Among them are plans to increase duty for alcohol, previously frozen by prime minister Rishi Sunak to aid the UK wine and spirit industry through fallout from the pandemic. This, however, will come to an end on August 1, when alcohol duty will see a 10 per cent increase.
From August 1, 2023, all alcohol products, except beer will see a significant duty increase and this will impact businesses involved in the manufacture, distribution, consumption and sale of alcohol products. Beer however is safe thanks to the "Draught Relief" scheme announced by Hunt at Westminster on Wednesday.
Alcohol duty is the tax on any alcohol we buy, from the pub to the supermarket. While it's paid by producers, this is usually passed on to customers in each drink they purchase. Other products like tobacco and soft drinks have also been impacted by the most recent budget.
Smokers are already feeling the financial brunt of the new changes, as duty increases came into force on tobacco products yesterday evening.
While the sugar tax that impacts bottled and can soft drinks will not change, it's expanding to affect drinks sold by certain retailers that distribute beverages through fountain machines.
Here's how the spring budget will impact you.
Alcohol
As part of Spring budget 2023, Chancellor Jeremy Hunt announced a 10.1 per cent rise in alcohol duty rates in line with the Retail Price Index (RPI), which currently sets inflation at 12.7 per cent.
The increase could see the price of a bottle of wine rise by about 44p, the biggest hike seen in over 50 years, according to the Wine and Spirit Trade Association. The group warned this will result in 90 per cent of wines affected by tax increases, with drinkers being tacked with a 20 per cent hike.
Beer on the other hand will be safe thanks to the Draught Relief scheme, which Hunt also dubbed the "Brexit Pub guarantee". This will ensure that tax on draught beers will remain the same from August 1.
Speaking on the plan, the Chancellor said: "British ale may be warm, but the duty on a pint is frozen."
However, manufacturers are less than pleased with the plans - including the Scottish Whiskey Association (SWA) - which says it's a "historic blow" to the industry. The group claims the UK government has broken its pledge to “review alcohol duty to ensure our tax system is supporting Scottish whisky.”
The tax burden on an average priced bottle of Scotch whiskey has now risen from 70 to 75 per cent. The duty rate on spirits will rise to £31.64 per litre of pure alcohol, meaning that £11.40 is collected in taxation through duty and VAT from a £15.22 bottle.
Chief Executive of the SWA Mark Kent said: “This is an historic blow to the Scotch Whisky industry. The largest tax increase for decades means that 75% of the average priced bottle of Scotch Whisky will be collected in tax, reducing already tight margins for an industry which employs tens of thousands of people and invests hundreds of millions annually across the UK."
Tobacco
Smokers will also face the brunt of spring budget plans, as the duty rate on all tobacco products will rise by 2 per cent above RPI inflation.
Data from the Office of National Statistics (ONS) puts the average price of a box of 20 cigarettes at £12.84 as of January 2023. With the increase, this will now rise to around £14.73 per pack.
It is also bad news for anyone who prefers hand rolled cigarettes, as these products will see an additional 6 per cent rise above RPI. The measures, enforced by the Tobacco Duty Regulator came into force at 6pm on Wednesday, meaning smokers will be feeling the pinch already.
Soft drinks
The soft drinks industry levy (SDIL), also known as the sugar tax, is applied to both imported and UK produced soft drinks that contain added sugar.
While duty for bottled and can drinks will not change, the levy will now include "packaged concentrates which are mixed with sugar at the point the drink is dispensed from a fountain machine."
This means that from April 1, any drink you buy at a fast food outlet, cinema or restaurant that's dispensed through a fountain machine will also be hit with the tax.
According to InstituteforGovernment.org, the levy applies at the following levels:
- No levy on soft drinks containing less than 5g of sugar per 100ml
- 18p per litre on soft drinks containing between 5g and 8g of sugar per 100ml
- 24p per litre on soft drinks containing more than 8g of sugar per 100ml.
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