Drinks industry lobbies Treasury not to raise taxes on alcohol as hospitality sector buckles under rising employment costs, Trump tariffs and dwindling clientele
With two weeks to go until the Budget, the seven trade bodies representing drinks producers across the UK have meet with Dan Tomlinson, Treasury minister responsible for HMRC, to urge the chancellor to support the sector and not raise duty.
But the latest HMRC figures showed that the sector paid £12.61bn in alcohol duty revenue in 2024-25, up only very slightly from £12.58bn the previous tax year. New rates of alcohol duty were introduced in August 2023 removing some of the differential in rates between types of alcohol, thereby reducing total tax take from £13.11bn in 2022-23, the last year before the revised rates kicked in.
Arguably this leaves some scope for the chancellor to revisit rates later this month, but this needs to be tempered by drinking habits, with clear declines in alcohol consumption, particularly among younger people, and less drinking outside the home, while parts of the drinks industry have been caught up in the 10% Trump tariffs.
In a joint statement after the meeting, the UK drinks group said: ‘Brewers, distillers, vintners, and cider makers are all facing significant challenges – investment is stalled and more jobs are being lost every day. This includes the hospitality sector, in which our industries play a vital role,’ the group said in a joint statement after the meeting.
‘Across the UK’s pubs, bars, restaurants, visitor experiences and retailers, costs have risen at a time when households are feeling the pinch. With one voice we want to be clear, as we were with the Exchequer secretary - now is not the time to raise excise duty.
‘By making the positive, growth driven choice to not increase duties, the chancellor can show she understands the pressures our industries face. More than that, she can give our sector the confidence to invest, to create jobs, and to return to growth.’
With a major overhaul of drinks duty just over two years ago and the impact of Trump tariffs on the sector, particularly hitting whisky sector hard, the drinks industry stressed: ‘Our members are committed to working with government to generate the revenues necessary to support vital public services. More investment, more jobs and more sales will do this, not more taxation. We hope the Chancellor will back our sector, and in doing so boost the economy.’
Alcohol duty is calculated on a complicated basis with numerous different rates depending on liquor content, while there is also a small producer relief where lower rates apply.
Jake Landman, partner and head of tax disputes at Pinsent Masons, said: ‘With the exception of products with an alcohol by volume (ABV) range of between 3.5% and 8.4%, the rate of duty depends entirely on the alcoholic strength of the product, regardless of alcohol type. In the mid-strength range, the rates depend on a combination of alcoholic strength and product type.’
‘Small producers may be eligible to pay a lower rate of alcohol duty across any alcohol product with an ABV of less than 8.5%. Producers must check their eligibility for the relief at the end of every production year, and must have estimated their alcohol production for the next production year, before calculating the discounted rates.’
The Budget will be delivered at 12.30pm on Wednesday 26 November.