A major overhaul of Britain’s alcohol duty system comes into force from 1st August and could have major implications for independent pub and bar owners, the Scottish Licensed Trade Association has cautioned.
Under the mainly ABV-based system (alcohol by volume), according to the UK Government, alcohol duty will be fairer and responsive to new products entering the market as consumer tastes evolve. It also “reflects the government’s commitment to tax simplification, helping to foster the right conditions for businesses to prosper and the economy to grow – one of the Prime Minister’s five priorities”.
One of the highlights of these changes is a reduced rate of duty on draught beer and cider which will reduce the duty paid by 9.2%, whereas the standard rate of duty on packaged beer will rise by 10.1%.
This move to create a differential between on and off-sales duty, not possible previously because of EU regulations, has been described by the Chancellor of the Exchequer as a “Brexit Pub Guarantee”.
Paul Waterson, SLTA spokesman, commented:-
“We are not convinced that this change in draft beer and cider duty will help us or our customers in any way. For the Chancellor to say this cut in draft beer duty is a ‘Brexit Pub Guarantee’ is as naïve as it is fanciful.
We know from experience that we don’t benefit from cuts to alcohol duty because the duty is paid by producers, who do not adjust their prices down accordingly when selling to us. It is a system designed to benefit the producers and the big pub companies. They are able to negotiate price discounts whereas smaller independent operators, such as our members, do not have that power.”
In 2021, the SLTA supported a radical proposal to cut duty in pubs and raise it in off-sales – a move that would boost the pub and bar business and simplify the system.
Mr Waterson pointed to research from the Social Market Foundation which shows this could be “revenue neutral” to the Treasury. Its analysis set out how reforms to alcohol duty could boost pub sales by 100 million pints a year, providing a lifeline to the hospitality industry and reducing harmful drinking.
He added:
“This would have been the radical change that we needed. Our premises would claim relief on alcohol duty paid under the current alcohol relief scheme which is in place at the moment for certain businesses. The changes today will keep the savings in the hands of the producers.”