Alcohol Duty: Changes to Calculations

July 27, 2023
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As announced by the Chancellor in the Spring Budget this year, the way duty is calculated on alcohol is changing.

HMRC announced a restructure of the current Alcohol Duty system, creating standardised tax bands for all alcoholic products based on alcohol by volume (ABV). These changes take effect on 1 August 2023.

Rather than exhaustingly long calculations that vary depending on if the product is beer, wine, spirits, or other, calculations will now solely be determined by a product’s alcoholic strength – the only exception is products with alcoholic strength between 3.5% and 8.4%.

Products with strengths between 3.5% and 8.4%, duty will be determined by both strength and product type, as outlined below:

The differentiation between product types in the mid-strength range has been maintained because the government believes that to introduce full equalisation would have a significant impact on the costs faced by some industries. In particular, the differential between beer and cider is maintained to avoid detrimental effects on cider producers.

These rates are subject to specific reliefs for draught products and small producer products and transitional arrangements for wine. HMRC is replacing the Small Brewery Relief (SBR) scheme with a new scheme called Small Producer Relief (SPR). HMRC is also introducing a Draught Relief (DR) scheme.

Small Producer Relief (SPR)

The Small Producer Relief scheme is aimed at small producers (under 4,500 hectolitres of pure alcohol) of all alcoholic products under 8.5% ABV and not just beer.

Details of the Small Producer Relief scheme can be accessed here:

Draught Relief (DR)

The Draught Relief scheme covers products under 8.5% ABV that are to be sold on draught. To qualify, the products must be packaged in containers of at least 20 litres and either connect to a dispensing system or incorporate one.

Details of the new Draught Relief scheme can be accessed here:

If you have any concerns or queries regarding the updates to the alcohol duty changes, please contact our team.