The UK government has introduced tax cuts to support pubs and small breweries, reducing draught beer duty by 1p per pint. This move aims to encourage people to visit pubs while also providing financial relief to small beer producers. These changes, worth £85 million, are designed to boost the alcohol industry by fostering innovation and growth.
Tax Cuts to Support Pubs and Small Breweries
The increase in draught relief, initially announced in the Autumn Budget, means that around 60% of all alcoholic drinks sold in pubs will benefit from lower taxes. This is the first time in 10 years that the duty on a pint of beer has been cut.
At the same time, the Small Producer Relief (SPR) scheme has been expanded to offer more support to small craft brewers. This allows them to experiment with new flavours and brewing techniques without facing excessive tax burdens.
Government’s Plan for Economic Growth
The tax cuts are a key part of the Prime Minister’s Plan for Change, which aims to rebuild the economy and put more money into people’s pockets. The UK government is focusing on strengthening high streets and supporting local businesses, with pubs and breweries playing a vital role in this effort.
James Murray, Exchequer Secretary to the Treasury, highlighted the importance of these measures, stating that they will help boost sector growth while ensuring that small breweries can compete and expand.
Encouraging More Pub Visits
According to Richard Naisby, Chair of the Society of Independent Brewers and Associates (SIBA), the reduced alcohol duty on draught beer makes pub prices more competitive compared to supermarkets. This should encourage more people to support their local pubs instead of purchasing alcohol from retail stores.
Additionally, the government is working to improve market access for small breweries. Many small beer producers struggle to sell their products in pubs, limiting their growth. A government review will explore ways to remove these barriers, ensuring that landlords can stock a wider range of beers and consumers have more choices.
Additional Measures to Support the Alcohol Industry
James Murray recently visited Queen Edith pub in Cambridge to discuss these initiatives with industry leaders. The discussion covered:
- Increasing support for small breweries and cider makers by cutting duty by up to 90% for the smallest producers.
- Exploring ways to help small brewers expand their presence in UK pubs and attract more customers.
- Encouraging more guest beer provisions, allowing pubs to offer a greater variety of locally brewed beers.
- Reducing fees for the Spirit Drinks Verification Scheme, which helps distilleries label their products correctly for sale in pubs and supermarkets.
In addition, the government has announced that mandatory duty stamps for spirits will be removed from 1 May 2025, making it easier for distilleries, including Scotch whisky producers, to sell their products.
Balancing Tax Cuts with Inflation
While these tax reliefs benefit the alcohol industry, the government has also increased alcohol duty in line with inflation. This measure ensures that public finances remain stable while funding essential services and economic investments.
Key Details on Draught and Small Producer Relief
- Draught Relief: A 1.7% reduction in alcohol duty (5.1% compared to RPI uprating) for draught products below 8.5% ABV, effectively cutting duty by 1p per pint of beer (average ABV 4.58%).
- Small Producer Relief (SPR): Available for alcohol under 8.5% ABV, with the highest relief (91.5%) on the first five hectolitres of pure alcohol for beer producers.
- Increased SPR for Non-Draught Products: The government is ensuring that small producers of both draught and bottled/canned beer receive similar tax benefits.
The UK government’s decision to cut draught beer duty and expand Small Producer Relief is a significant boost for the alcohol sector. These measures will help pubs attract more customers and support small brewers in expanding their businesses.
By reviewing access to the pub market for small producers and reducing regulatory costs, the government aims to foster innovation and create a more competitive industry. While inflation-related duty increases will maintain economic stability, the overall tax relief package is expected to drive growth and support local communities.
Source: Gov.uk
FAQ’s
1. What is Draught Relief?
Draught Relief is a tax reduction on draught alcoholic beverages with an ABV below 8.5%. It lowers the duty by 1.7%, equivalent to a 1p cut per pint of beer.
2. How does Small Producer Relief (SPR) help breweries?
SPR offers tax relief for small breweries producing beer under 8.5% ABV, with up to 91.5% duty reduction on their first five hectolitres of pure alcohol.
3. Why has the government cut beer duty?
The government aims to support pubs, promote small brewers, and boost economic growth by making draught beer more affordable and helping craft breweries expand.
4. Will these tax cuts apply to supermarket beer?
No, the reduced duty applies only to draught beer sold in pubs, encouraging people to support local establishments instead of buying from supermarkets.
5. What other changes are coming for the alcohol sector?
Mandatory duty stamps for spirits will end on 1 May 2025, and fees for the Spirit Drinks Verification Scheme will be reduced to help distilleries label their products.
