In the wake of the 2018 Autumn Budget, the UK government announced major changes to alcohol levies that would go into effect in February 2025. In line with the Retail Price Index (RPI) inflation rate, Chancellor Rachel Reeves announced a 2.7% increase in the levy on non-draught alcoholic beverages. The levy on draft goods served in bars and pubs, on the other hand, will be reduced by 1.7% to help the beleaguered hospitality industry.
Numerous industry participants have criticised this approach, claiming that the increase in non-draft products will raise consumer prices and possibly impede company expansion.
According to Wine and Spirit Trade Association (WSTA) CEO Miles Beale, the rise is a “real kick in the teeth” for consumers and businesses alike. He noted that prior duty hikes have frequently led to lower Treasury receipts because of lower sales. Another cause of disagreement is the implementation of a convoluted new system that divides still wine into several tax bands according to alcohol by volume (ABV). Critics assert that this will raise costs for customers and make compliance more difficult for firms, especially small and medium-sized ones.
Nonetheless, proponents of the draught duty reduction believe it is an essential step to help the hospitality industry, which is still recovering from the COVID-19 pandemic’s effects. Although some industry participants applaud this feature, they caution that the overall increases in non-draught charges could cancel out these advantages, resulting in price increases that might turn off buyers.
Calls for more extensive measures to support the alcohol and hospitality industries, which are dealing with a number of operational problems, have been sparked by the developments. The decision to increase levies has drawn criticism from a number of organisations, including the Scotch Whisky Association, especially as it impacts goods that are already subject to high taxes.
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