Alcohol Duty Uprating
Published 29 October 2018
© Crown copyright 2018
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This publication is available at https://www.gov.uk/government/publications/increase-in-alcohol-duty-rates/alcohol-duty-uprating
Who is likely to be affected
This measure will affect businesses and individuals responsible for accounting for alcohol duty prior to consumption – such as producers, importers, warehouse keepers and traders – as well as retailers and consumers of alcohol more generally.
General description of the measure
The public finances assume that all alcohol duty rates increase by Retail Price Index (RPI) year-on-year. This measure changes the expected duty rates on some alcohol manufactured in, or imported into, the UK.
The duty rate for the new mid-strength cider band was also announced at Budget 2018.
Policy objective
The government is committed to helping pubs, which are important community assets that encourage responsible alcohol consumption.
Background to the measure
At Budget 2018, the Chancellor of the Exchequer announced that the following duty rates will be frozen:
- duty rates on beer
- duty rates on spirits and other drinks above 22% alcohol by volume (abv)
- duty rates on still cider and perry, and lower strength sparkling cider and perry
The duty rates on wine and made-wine at or below 22% abv, and high strength sparkling cider above 5.5% abv will rise by RPI inflation from 1 February 2019.
Detailed proposal
Operative date
The new alcohol duty rates will have effect from 1 February 2019.
Current law
Alcohol duty rates are set out in the Alcoholic Liquor Duties Act 1979. The duty rates for:
- spirits are set out in section 5
- beer are set out in section 36(1AA) and 37(4)
- cider are set out in section 62(1A)
- wine and made-wine are set out in schedule 1
Proposed revisions
Legislation will be introduced in Finance Bill 2018 to 2019 to revise the alcohol duty rates and to introduce the new mid-strength cider duty band.
Sections 62(1A) and Schedule 1 of the Alcohol Liquor Duties Act 1979 will be amended to provide for the relevant alcohol duty rates. The revised duty rates are:
| Alcohol detail | Rate |
|---|---|
| sparkling cider and perry exceeding 5.5% but less than 8.5% abv | £288.10 |
| wine and made-wine exceeding 1.2% but not exceeding 4% abv | £91.68 |
| Alcohol detail | Rate |
|---|---|
| wine and made-wine exceeding 4% but not exceeding 5.5% abv | £126.08 |
| still wine and made-wine exceeding 5.5% but not exceeding 15% abv | £297.57 |
| sparkling wine and made-wine exceeding 5.5% but less than 8.5% abv | £288.10 |
| sparkling wine and made-wine of at least 8.5% but not exceeding 15% abv | £381.15 |
| wine and made-wine exceeding 15% but not exceeding 22% abv | £396.72 |
Summary of impacts
Exchequer impact (£million)
| 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 |
|---|---|---|---|---|---|
| -35 | -165 | -175 | -175 | -180 | -185 |
These figures are set out in Table 2.1 of Budget 2018 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2018.
Economic impact
This measure is expected to have a small, negative impact on CPI and RPI inflation in tax year 2019 to 2020. A behavioural adjustment has been made to take into account changes in the consumption of alcohol in response to a price change.
Impact on individuals, households and families
At the current rate of VAT, and assuming 100% pass through wherever alcohol is purchased, the average tax (duty+VAT) in 2019 on a typical:
- pint of beer will be unchanged and 14p lower than it otherwise would have been since ending the beer duty escalator in 2013
- pint of cider will be unchanged and 4p lower than it otherwise would have been since ending the cider duty escalator in 2014
- bottle of scotch whisky will be unchanged and £1.54 lower than it otherwise would have been since ending the spirits duty escalator in 2014
- bottle of wine will be 8p higher but 16p lower than it otherwise would have been since ending the wine duty escalator in 2014
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
Due to differences in alcohol consumption, any changes to alcohol duties will have an equalities impact that reflects consumption trends across the adult population.
Impact on business including civil society organisations
The changes in alcohol duty rates will impact on alcohol manufacturers, importers and retailers. This measure is expected to have a negligible administrative impact on businesses.
Those businesses affected by the duty rate change will incur a negligible one-off cost to update their systems. There are not expected to be any additional ongoing costs.
This measure is not expected to have any impact on civil society organisations.
Small and micro business assessment: This measure will impact on some small and micro businesses. Small cider makers – those producing less than 70 hectolitres – do not pay any cider duty.
Operational impact (£million) (HMRC or other)
HMRC will incur a negligible one-off cost for changing alcohol duties.
Other impacts
Health impact assessment: increasing wine and sparkling cider duty rates by RPI inflation is likely to lead to a minor decrease in overall alcohol consumption in the UK.
Other impacts have been considered and no significant impacts have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax receipts.
Further advice
If you have any questions about this change, contact Excise enquiries on Telephone: 0300 200 3700 (overseas +44 2920 501 261).