UK Introduces New Alcohol Tax Regime

The United Kingdom underwent a significant transformation in its approach to taxing alcoholic beverages on August 1, 2023.

The adjustments have entailed the alignment of tax rates with the alcoholic content of the drinks, accompanied by the introduction of fresh tax reliefs aimed at benefiting pubs and small breweries.

One notable change involves the elevation of the Draught Relief percentages. Specifically, the percentage for qualifying beer and cider products has been augmented from five percent to 9.2 percent. Similarly, the percentage for qualifying wine, spirits-based, and other fermented products has seen an increase from 20 percent to 23 percent.

To address previous limitations, the Small Brewers Relief has been renamed as the Small Producer Relief, following a comprehensive reform and expansion process. Previously, a cutoff point existed where relief ceased for brewers producing over 5,000 hectolitres annually. The revamped structure introduces a gradual tapering approach toward the removal of relief. Moreover, the scope of relief has been broadened, extending its benefits to all producers crafting drinks with an alcohol by volume (ABV) below 8.5 percent. This expansion notably encompasses craft brewers and cidermakers, granting them eligibility for relief on their products.

In a pivotal move, the elevated duty rate for sparkling wines has been repealed, bringing them in line with the duty rate of still wines. Further parity has been established between liqueurs and fortified wines.

Consequently, sherry and Irish Cream liqueurs will now be subject to the same duty rate, while the duty on super-strength 'white cider' will increase.

For 18 months from implementation, all wine between 11.5-14.5 percent ABV will be taxed as though the alcohol content is 12.5 percent ABV, until February 1, 2025.

HMRC also intends to take forward plans to modernize the approval, return, and payment processes for domestic producers of alcohol products. These changes are currently scheduled to take effect from late 2024 with the introduction of a new digital system.

Contacts

If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact info@act.london or your usual A.C.T. contact.