The price of every alcoholic drink in the country is to change from August 1 with a complete reform of Alcohol Duty - the tax HMRC adds to the price of every pint, shot, glass, can and bottle of booze. It is the biggest change to the way Alcohol Duty is calculated in 140 years, and will change the price of every drink you buy in a pub or restaurant, or in a shop.
HMRC said it will make the system fairer - replacing the current system of a 'flat' fee added to drinks based on whether they are beer, wine, cider or spirits. Instead the new rate takes into account the strength of the drink - their ABV, reports The Echo.
Treasury minister Gareth Davies said: “Because we left the EU we can make sure our alcohol duty system works for us. From next month the whole system will be simpler, the duty will reflect the strength of the drink. We will also protect pubs and brewers with our Brexit Pubs Guarantee keeping Draught Duty down, and a new Small Producer Relief."
There will be a reduced rate for draught products, which will reduce tax 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 premises such as pubs and restaurants.
The move will raise £13.1 billion in taxes in 2023/24, rising to £15.8 billion in 2027/28.
A Government spokesman said: "As announced at Spring Budget 2023, the government will increase the duty rates under the revised duty structure for alcohol products being introduced from 1 August 2023 in line with the Retail Price Index (RPI). This includes all alcoholic products produced in, or imported into, the UK.
"The government will also increase the value of Draught Relief from 5% to 9.2% for qualifying beer and cider products and from 20% to 23% for qualifying wine, other fermented products (previously made-wine) and spirits. All changes will take effect from 1 August 2023."
Alcohol Duty rates have remained frozen since Autumn Budget 2020. On 19 December 2022, the government extended the current Alcohol Duty freeze by 6 months from 1 February to 1 August 2023 provide certainty to businesses.
Although the public finances assume a RPI increase each February, in practice the government has enacted numerous cuts or freezes to alcohol duties over the past decade.
At the current VAT rate, and assuming 100% of the tax is passed through to consumers wherever alcohol is purchased, from 1 August 2023 the tax on a typical drink will be:
- 4% ABV pint of draught beer will be 0 pence higher
- 4% ABV 500ml bottle of non-draught beer will be 5 pence higher
- 5% ABV pint of draught cider will be 2 pence higher
- 5% ABV 500ml bottle of non-draught cider will be 5 pence higher
- 40% ABV 25ml serving of whisky will be 3 pence higher
- 5.4% ABV 250ml can of spirits-based RTD will be 6 pence lower
- 11% ABV 250ml glass of still wine will be 5 pence higher
Individuals who drink stronger alcoholic products may pay more through the revised duty structure.
Individuals who drink draught products in on-trade venues (like pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (like supermarkets).
