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Draught pints to cost 1p less after tax change Wine and spirits duty to rise but tax on a pint to fall
(about 3 hours later)
Draught pints will cost 1p less from the beginning of February following a cut in alcohol duty. The price of wine and spirits is set to rise from Saturday after an increase in tax and duties comes into effect.
The 1.7% tax drop on the production of draught alcohol announced in last year's Budget is the first alcohol duty cut in a decade. Taxes will rise in line with inflation, and a new system of duties based on the strength of drinks will also come into effect.
However, critics have said increases in employers' National Insurance contributions and minimum wage rises mean pint prices will ultimately go up as pubs pass on higher costs to customers. A trade body for the industry called the changes a "bitter blow", saying the duty on a bottle of 14.5% ABV (alcohol by volume) red wine will rise by 54p, and go up by 32p on a bottle of gin.
A relief for craft alcohol producers also comes into effect from the beginning of next month, with both policies costing £85m. There is some better news for pub-goers, as a small cut in duty on draught pints will also come into effect.
The 1.7% tax drop on the production of draught alcohol, which was announced in last year's Budget, is the first such cut in a decade.
The relief applies to draught drinks below 8.5% ABV, which equates to a 1p tax cut on an average-strength pint.The relief applies to draught drinks below 8.5% ABV, which equates to a 1p tax cut on an average-strength pint.
The measure will affect three-fifths of all alcoholic drinks sold in pubs, the government said. Businesses 'squeezed'
Meanwhile, the small producer relief is for products which are below 8.5% ABV, and tapers away the more alcohol is produced. From Saturday, the alcohol tax will rise by 3.6%, in line with the Retail Prices Index measure of inflation.
There will also be further increases in duty for some drinks, depending on their strength.
A new system of duties based on strength was introduced in August 2023, although some wines were given a temporary reprieve. This relief is now ending.
The Wine and Spirit Trade Association (WSTA) says, external the changes mean duty on a 14.5% ABV bottle of red wine will have risen by 98p over the past 18 months.
The WTSA argues that the tax rises are self-defeating for the government, as revenues from alcohol tax are lower than the previous year.
"The government continues to claim that the tax hikes are part of their big plan to plug the black hole in the public finances, but a series of record-breaking tax levies are doing the exact opposite," said WSTA chief executive Miles Beale.
"There are no winners under the UK's punishing alcohol tax regime – higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more."
A Treasury spokesperson said: "The alcohol duty reforms have modernised and simplified the duty system, prioritising public health and incentivising consumption of lower strength products."
As well as cutting the tax on draught alcohol, the government is also introducing small producer relief for products which are below 8.5% ABV. The relief tapers away as production is increased.
The Society of Independent Brewers and Associates said the policies would help pubs compete against cheap alcohol sold in supermarkets.The Society of Independent Brewers and Associates said the policies would help pubs compete against cheap alcohol sold in supermarkets.
The government says the two measures are worth £85m and the Exchequer Secretary to the Treasury, James Murray, said they would help "boost sector growth".
However, critics have said other government policies - including the forthcoming rise in employers' National Insurance contributions (NICs) and the increase in the minimum wage - mean pint prices will have to go up as pubs pass on higher costs to customers.
'April cliff edge''April cliff edge'
However, critics have said the tax reliefs are not enough to counter other decisions announced by Chancellor Rachel Reeves. The government has said the rise in employers' NICs was needed to fix the public finances.
From April, the minimum wage will rise by 6.7% for those aged 21 years or older to £12.21. At the same time, firms will also pay higher National Insurance contributions. But some pub owners have said they are looking at a 30p to 40p increase on a pint because of higher employment costs.
Some pub owners have said they are looking at a 30p to 40p increase on a pint because of higher employment costs.
Last week, Wetherspoons chief executive Tim Martin said that higher employment expenses would cost the firm £80m a year.Last week, Wetherspoons chief executive Tim Martin said that higher employment expenses would cost the firm £80m a year.
He said measures announced in the Budget "have a significantly bigger impact on pub and restaurant companies than supermarkets" and accused politicians of being "dinner party goers, rather than pub goers". He said measures announced in the Budget had "a significantly bigger impact on pub and restaurant companies than supermarkets" and accused politicians of being "dinner party goers, rather than pub goers".
British Beer and Pub Association chief executive Emma McClarkin said pubs and brewers "now face an April cliff edge".British Beer and Pub Association chief executive Emma McClarkin said pubs and brewers "now face an April cliff edge".
However, unions have defended the increase in minimum wage and criticised large firms of "pleading poverty" while making big profits. However, unions have defended the increase in the minimum wage and criticised large firms for "pleading poverty" while making big profits.
The government has said the rise in employers' National Insurance payments was needed to fix the public finances.
The measures come at a time when the hospitality industry is already struggling.
Several bars, pubs, and restaurants have already said their venues are "eerily quiet" because people are not spending enough due to the cost of living.