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Could the price of your favourite drink be rising from 1 August?

Nick Cheek
Written By:
Nick Cheek

The way in which alcohol duty is calculated will be changed from tomorrow, putting prices up on certain tipples, the Government has announced.

This confirms a policy direction that was part of the Spring Budget, where the Government said it would increase the duty rates under a revised structure which will be in line with the Retail Price Index.

All alcoholic drinks will be taxed based on their alcohol by volume (ABV), the aim being it will make the alcohol duty system much simpler.

It will replace the current approach where there were four separate taxes covering beer, cider, spirits, wine and made-wine.

For example, duty on all alcoholic products that has less than 3.5% ABV will face a charge of £9.27 per litre of alcohol in the product.

Duty on beer that has at least 3.5% ABV but less than 8.5% will be taxed at £21.01 per litre of alcohol in the product.

Meanwhile, there will be a charge of £24.77 per litre of alcohol on spirits, wine and other fermented products which have at least 3.5% but less than 8.5% ABV.

Draught beers relief tonic

There is positive news for draught beers as the Government plans to increase the relief on draught alcohol products. The value of the relief will be raised from 5% to 9.2% for qualifying beers and ciders.

While those who prefer wine can toast a relief increase of 3% up to 23% overall.

The Government’s objective is to support the hospitality industry which endured a tough time during the Covid-19 pandemic.

The effect on pub goers will be that there will be zero increase on the price of a draught pint of beer that has ABV of 4%.

However, there is a different impact on a range of drinks. Cider drinkers face a 2p per pint rise if a draught product consists of 5% ABV. But a 250ml can of ready to drink spirits will be 6p lower with a ABV rate of 5.4%.

Those who look towards the “top shelf” and ask for a whisky, for example, we see a 25ml serving rise by 3p  if the ABV is at 40%.

Exchequer Secretary to the Treasury Gareth Davies said: “Because we left the EU we can make sure our alcohol duty system works for us. From 1 August 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.”

While Jonathan Athow, the director general of customer strategy and tax design, of the HMRC, explained: “After listening to feedback from industry, economists, public health groups and many business owners, the new alcohol duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time.”

“The new system will support the government’s public health objectives and provide extra support to small producers, pubs and the hospitality sector.”