Alcohol Duty Reform

The measure

The government intends to restructure alcohol duty in recognition that the existing system is outdated and requires simplification.

In summary the reform will look to restructure alcohol duty so that all beverages will be taxed in direct proportion to their alcohol content. To simplify the regime, the government intends to reduce the number of main rates from 15 to 6, with common thresholds for each set of bands across product categories, and rates will be harmonised for drinks at 8.5% ABV or above.

To encourage innovation, the government intends to introduce reduced rates for products below 3.5% ABV. The government also intends to introduce a common small producer relief, so to reduce the tax burden on smaller producers of wine, cider, spirits and made-wine below 8.5% ABV. Alongside this, a new relief that recognises the importance of pubs and supports responsible drinking will be introduced, with duty rates on draft beer and cider being cut by 5%.


Who will be affected?

Manufacturers, importers, distributors, retailers and consumers of beer, wine, spirits and cider.


When will the measure come into effect?

The government has published a consultation on the detail of these reforms, which will close on 30 January 2022. The government will continue to discuss the application of these reforms to Northern Ireland with the EU during the consultation period of the review. It is anticipated that changes under the reform will be effective from February 2023.

Our view

This is a welcome progression of the alcohol duty review announced in March 2020. This measure sets out government proposals to reshape and reform the alcohol duty system for the long-term, balancing social, economic and fiscal considerations that affect alcohol duty.