Consumers hit by 'biggest single alcohol duty increase in almost 50 years' as Sunak insists businesses will benefit
1 August 2023, 08:35 | Updated: 1 August 2023, 09:45
Consumers have been hit by the biggest single alcohol duty increase in almost 50 years.
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All alcohol will now be taxed based on its strength, rather than the previous categories of wine, beer, spirits, and ciders.
Prime Minister Rishi Sunak initially set out the reviewed system - intended to encourage drinkers to cut back - when he was Chancellor.
The PM described the overhaul as "the most radical simplification of alcohol duties for over 140 years", enabled by Brexit.
But the increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).
Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, and a bottle of port will go up by more than £1.50.
The total tax on a bottle of gin or vodka will go up by around 90p.
Roads Minister confident pubs will pass on 11p a pint saving to punters
Meanwhile, the duty charged on draught pints across the UK is being cut by 11p.
Ministers have argued that struggling pubs will get a boost from the cut in beer duty - but critics say it is unlikely this saving will be passed on to customers. The Wine and Spirits Trade Association (WSTA) warned the new rules could leave many smaller businesses struggling to stay afloat as they will have to push up prices.
In March's Budget, Chancellor Jeremy Hunt also announced that the freeze to alcohol duty would end on August 1 and increase by inflation, at 10.1%.
Speaking on LBC's Nick Ferrari at Breakfast, Roads Minister Richard Holden said he was sure pubs would pass on the drop in duty to their customers.
"Anything that we can do to help support our, really important, pubs and clubs across the county is a valuable thing."
Addressing the changes, Mr Sunak said: "I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.
"Not only will today's changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.
"We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs."
However, the British Beer and Pub Association (BBPA) said brewers will pay 10.1% more tax on bottles and cans of beer from Tuesday, meaning tax will make up around 30% of the cost of a 500ml bottle.
Despite the draught freeze, the BBPA said the tax increase on packaged beer will add an extra £225 million of costs per year across the industry.
Chancellor Jeremy Hunt said the Government was doing "all we can" to help Britain's pubs as they face rising costs and said the change taking effect on Tuesday "catapults us into the 21st century".
The Treasury has said that more than 38,000 UK pubs will benefit from tax relief that effectively freezes or cuts the alcohol duty on beer poured from tap
"British pubs are the beating heart of our communities and as they face rising costs, we're doing all we can to help them out. Through our Brexit Pubs Guarantee, we're protecting the price of a pint," Mr Hunt said.
"The changes we're making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially."
