HMRC warning ahead of changes to Alcohol Duty in August

On August 1, the Alcohol Duty system will become much simpler, taxing all alcoholic drinks based on their alcohol by volume (ABV).

This replaces the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.

The changes are designed to make the system fairer, with small producers, pubs and restaurants benefiting from reduced rates on products such as beer and cider.

On August 1, the Alcohol Duty will change in the UK (Image: Getty Images)

Jonathan Athow, Director General of Customer Strategy & Tax Design, HMRC, said: “After listening to feedback from industry, economists, consumer organisations, 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.”

The new system will create six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

These reforms will replace and extend the existing Small Brewers Relief with Small Producer Relief. This means that all small businesses that produce any alcoholic products with an ABV of less than 8.5% will be eligible for reduced rates on qualifying products, if they produce less than 4,500 hectolitres per year.

To support the hospitality industry, and recognising the vital role played by pubs in our communities, there will also be a reduced rate for draught products – known as Draught Relief. This will reduce Alcohol Duty 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 reforms will mean that every pint in every pub across the UK will pay less duty than their supermarket equivalent, in line with the government’s Brexit Pubs Guarantee.

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for 18 months from 1 August 2023 until 1 February 2025.