There will be a one-year freeze on alcohol duties on beer, wine, spirits and cider from 1 February 2022. This is forecast to have an ongoing cost to the Exchequer of £545 million next year rising to £620 million by 2026/27.
Longer term, the Government is looking to rationalise and simplify the alcohol tax system. The number of main rates will reduce from 15 to 6 from February 2023. From this date all products above 8.5% ABV (Alcohol by Volume) will be taxed in proportion to their ABV as opposed to the volume of finished product.
The Government will also introduce new rates for low strength drinks below 3.5% ABV to encourage manufacturers to develop new products at lower ABVs. The Government will also introduce a new small brewers’ relief for cidermakers and other producers of lower ABV drinks. The aim is to allow small producers to diversify their product range to other products below 8.5% ABV while still benefitting from reduced rates.
Duty rates on draught beer and cider will be cut by 5%, taking 3 pence off a pint.