Saturday will mark the end of ‘dry January’ for many, but returning drinkers might be surprised when they go to buy their first drink of 2025.
A 1.7% cut in the duty on draught beer means pints pulled in the pub (below 8.5% ABV) should be a penny cheaper.
It is the first time in a decade that tax on draught alcohol has decreased – but not all drinks are getting cheaper.
The price of wine and spirits is set to rise from Saturday, as an increase in tax and duties comes into effect.
Alcohol tax will rise by 3.6%, in line with Retail Prices Index inflation as announced in the Budget last year.
At the same time, a new system to tax wines and spirits based on strength will be introduced.
This means a 40% ABV bottle of gin, for example, will be 33p more.
And a 14.5% ABV bottle of wine will increase by 54p.
The government is also introducing an increase in relief for small producers “to help small breweries innovate” and “support economic growth.”
Alongside the increase in draught relief, these tax cuts are worth £85m.
Exchequer Secretary to the Treasury, James Murray said: “Our pubs and brewers are an essential part of the fabric of the UK and our brilliant high streets.
“Through draught relief, small producer relief, and expanding market access for smaller brewers, we will help boost sector growth and deliver our Plan for Change to put more money in working people’s pockets.”
But the UK Spirits Alliance, which represents 300 distillers, disagrees.
It has written to the Chancellor warning of the impact on a sector “we should be championing not crushing,” and says Saturday’s “tax increase could be the final nail in the coffin for many.”
It argues that the “triple-whammy” of “duty hikes, tax rises, and spiralling business costs are forcing distillers to shut down”.
A survey of 4,000 people commissioned by the group found that 77% of pub managers believe the hike in spirits duty will damage business.
And 88% of bar owners and publicans think the cut in duty on draught beer will have no impact.
Copper Rivet is a family-run distillery in Chatham, Kent. It closed its restaurant after the October budget, blaming it for “significantly increasing operational costs and worsening the business outlook, pushing the restaurant’s viability beyond reach.”
Ahead of Saturday’s changes to alcohol duty, Stephen Russell, the Distillery’s Managing Director, said: “The spirits industry in this country is a massive success and it’s an incredible exporter.
“And it is completely illogical to think that you are supporting an industry by increasing the tax burden specifically targeted at those products, and then also across the board on overheads like employing people.
“The current duty regime is such that a centilitre of alcohol is taxed significantly more if it appears in a bottle of spirits than if it does in a can of beer, which I don’t understand.
“It’s illogical. This government may want to be pro-growth, but I haven’t seen anything that they have done in particular in our sphere that is supportive of growth. Frankly the opposite”.
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