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The National (Scotland)
The National (Scotland)
National
Xander Elliards

Labour urged to U-turn as hiked Scotch whisky tax 'loses Treasury £300m'

LABOUR have been urged to end the UK’s “damaging” tax policies on Scottish whisky – with an SNP MP saying Westminster has the industry “over a barrel”.

Chancellor Rachel Reeves will deliver a Spring Statement – branded an “emergency Budget” by opposition – in the Commons on Wednesday and is facing calls to row back tax rises on whisky which research shows have actually led to lower income for the Treasury.

According to Scotch Whisky Association analysis of HMRC figures, revenue from spirits duty fell by £255 million between August 1, 2023 and November 30, 2024 when compared to the same period the previous year.

On August 1, 2023, the Conservatives’ 10.1% hike in duty on whisky came into effect. 

In her Budget last October, Reeves increased the burden on whisky in line with inflation, which meant a further 3.65% increase which came into effect on February 1 this year.

The Scotch industry is also facing pressures from US tariffs – which will automatically come into effect in June 2026 as things currently stand

When US president Donald Trump first brought in the tariffs in 2019, the Scotch Whisky Association reported a “stark” and immediate 25% drop in exports to the US for the final quarter of that year.

Graham Leadbitter, the SNP MP for Moray West, Nairn and Strathspey – meaning he represents one in three Scotch whisky distilleries, warned that “successive Westminster tax raids on Scottish whisky don’t just have the industry over a barrel, it is actually costing the public purse hundreds of millions in lost revenue”.

He said that Reeves’s Spring Statement “represents the last chance saloon for the Labour Chancellor to end Westminster’s damaging tax raid on Scottish whisky and finally give the industry some badly needed relief as it faces the threat of tariffs”.

He went on: “When the last Tory government hiked Whisky Duty, tax revenue raised by the industry fell by £300m. The only sensible option, both for supporting Scotch whisky and revenues is to now cut whisky duty – instead of this Labour Chancellor breaking another promise.

(Image: Graham Leadbitter)  “Providing that badly needed relief is all the more important with the prospect and possibility of Trump tariffs which may limit sales of whisky in one of its most important markets.   “So far Westminster has shown itself to be no friend of the whisky industry, it needs to finally take heed of the multiple warnings over the last few months, as well as the analysis from experts like the Scotch Whisky Association."

In January, Scotch Whisky Association chief executive Mark Kent said: “Yet again the industry has been proved right about how hiking tax rates leads to less revenue and stalls growth. 

“We are not crying wolf – HM Treasury needs to understand that even this resilient industry cannot be stretched beyond breaking point.”

A UK Government spokesperson said: “We’re committed to supporting businesses, including whisky producers, including through capping corporation tax at 25% and publishing a business tax roadmap so that future investments can be planned with confidence.

“To provide specific support to the Scottish whisky industry, the UK Government will reduce fees for geographical verification making it cheaper for producers to badge their products.”

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