Taxes on sparkling wine, draft beer, and cider need to be cut, but will increase for stronger drinks like red wine following an alcohol tax shock.
The new system, which is expected to start in 2023, will result in a higher tariff for stronger alcohol, the chancellor said.
The excise duty on sparkling wines will end and the tax on draft beer and cider served in pubs will be cut.
Chancellor Rishi Sunak called it the “most radical simplification of alcohol tariffs in over 140 years”.
It also announced that the planned increase in duties on spirits, wine, cider and beer that will take effect from midnight on Wednesday has been canceled.
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“To radically simplify the system, we are reducing the number of major duties from 15 to just six,” said the Chancellor.
“Our new system will be designed around a common sense principle: the stronger the drink, the higher the rate. This means that some drinks, such as stronger red wines, fortified wines or high alcohol” white ciders ” they will see a small increase in their rates because they are currently under-taxed due to their strength. “
Sunak said many low-alcohol drinks are “currently overloaded,” adding, “Pinks, fruit ciders, spirits, beers and low-alcohol wines – today’s changes mean they will pay less.”
In relation to sparkling wines, Sunak said: “I will eliminate the irrational tariff of 28% they currently pay. Sparkling wines, wherever they are produced, will now pay the same duty as still wines of equivalent strength.”
The tariff cut on sparkling wine was welcomed by Kate Goodman, owner of the beverage importer of Cheshire Reserve Wines, but was disappointed that the change was not immediate.
“Christmas is our busiest time. It would be nice to present it before that time. We need help getting back on our feet after 18 rather crippling months,” he said.
The reduction in tariffs on low-alcohol drinks will encourage people to buy British wines, said Jonathan Piggins, managing director of British wine trader Corkk.
“UK vineyards are being taken more and more seriously by major foreign players and the reduction in the tax on low alcoholic beverages will give the country an even more prominent position on the global wine map.”
The changes were less welcomed by Liam Manton, co-founder of Didsbury Gin.
“An additional tax on high alcoholic beverages will be a real challenge for companies like ours,” he said, adding that on average 70% of the price of a bottle of gin is already taxed.
In a move to help struggling pubs, Mr. Sunak announced a new lower duty rate for draft drinks, which he said would reduce the cost of a pint by about threep.
He said that “the facilitation of the draft will reduce duties by 5%” and “will apply to drinks served from draft containers over 40 liters.”
The chancellor said this would benefit the community pubs in particular “which do 75% of their trade on tap”.
It also announced proposals for a new “small producer relief” to include small cider producers and other producers producing alcoholic beverages with less than 8.5% alcohol by volume (ABV).
Jez Lamb, founder of the Wirral-based craft beer market, Beers @ No.42, said the relief project has benefited the big players in the market, not the smaller, independent breweries that need support most.
“It’s great to see the alcohol tax cut on draft beer, but this is only for ‘containers’ over 40 liters. This is great for large breweries, but so many small craft breweries only supply 30-liter containers.” , he said.
Creating a draft rate and streamlining the tariff system is good news, said Nick Mackenzie, chief executive of Greene King, which has 2,700 pubs.
“It’s a much needed vote of confidence in the great British pub as we face an uncertain winter, work stoppages and rising costs.”
William Robinson, chief executive of Robinsons Brewery in Stockport, said the reduced rate of the draft beer tax and the cancellation of the planned inflation-related beer tax hike showed that the chancellor “acknowledges the contribution that pubs give to the communities they support and serve. “
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