The tax relief will result in 1p off per pint of average strength beer and cider
Chancellor of the Exchequer Rachel Reeves, who presented the first Labour Budget in 14 years, said: “For draught, I am cutting draught duty by 1.75%, which means a penny off the pint price in the pub.”
Government documents explaining the move stated: “To recognise the economic and cultural importance of British pubs, and commitment to supporting smaller brewers, the Government is cutting alcohol duty on draught products from February next year, reducing it by 1 penny per average strength pint.
“Alcohol duty on non-draught products will increase in line with Retail Price Index (RPI) inflation from the same date.”
The Campaign for Real Ale said: “Despite general rises in alcohol duty next year, CAMRA is pleased to see the Chancellor’s decision to cut the rate of tax specifically on beer and cider served in pubs, clubs and taprooms.
“This will help pubgoers as well as independent breweries and cider producers who sell more of their products into pubs, and recognises the principle that drinking in the community setting of the local pub is far preferable to the likes of cheap supermarket alcohol.”
Draught is 60% of pub drinks sold
The Budget statement added the Government it “is committed to supporting smaller brewers” and said the Budget is reducing duty on qualifying draught products, which represent approximately 60% of alcoholic drinks sold in pubs.
This measure reduces duty bills by over £85m a year, cutting duty on an average strength pint by a penny.
To support small producers, the Government will make the Small Producer Relief more valuable and will also consult on ways to encourage small brewers to retain and expand their access to UK pubs, maximising drinkers’ choice and local economies, including through provisions to enable more ‘guest beers’.
While the Government is cutting duty on draught products, it has also heard representations to increase alcohol duty by more than inflation to tackle increasing alcohol-related deaths, as well as economic inactivity.
The Society of Independent Brewers & Associates (SIBA) CEO Andy Slee said: “The Chancellor’s announcement that she will raise the draught duty discount was a positive step, which shows a continued support for breweries and beer in pubs that contribute greatly to local communities and economies.
“But with broader alcohol duty, business rates, wages and national insurance contributions all going up pubs and breweries are going to be worse off overall.
“SIBA also welcomes the Government’s consultation on pub market access, which has the potential to improve the ability for small independent breweries to supply local pubs and we look forward to working with the Government and our colleagues across the industry to ensure this has a positive outcome which will improve consumer choice.”
Young’s CEO Simon Dodd said: “We are pleased the Government has decided to cut draft duty, which is a small step towards reducing the huge tax burden faced by our industry.
“Unfortunately, given the other measures announced today, there are many more snakes than ladders for the hospitality sector, a vital industry for the communities we serve and the country’s economy as a whole.”
A Heineken UK spokesperson said: “While we are disappointed the headline rate of duty will be increased, it’s positive that the duty on a pint in a pub has been cut. We also recognise the extension of business rates support for pubs, albeit at a lower rate.
“We still have one of the highest rates of beer duty of any country in Europe, so this is mixed news for pubs, pints, punters and publicans.”
Keystone Brewing Group CEO Mark Williams added: “Today’s autumn Budget announcement unfortunately misses the mark for the brewing and pub sectors. Although we appreciate the small reduction in draught duty, this move falls short of the comprehensive support breweries and pubs need, especially with other alcohol duties rising by 2.7% alongside the ongoing pressures of rising costs, energy prices and inflation.”
Encourage responsible drinking
Meanwhile, details in the Budget documentation read: “The Government is also mindful of the cost-of-living pressures on people who drink moderately and responsibly.
“Balancing these pressures, the Government will uprate alcohol duty in line with RPI, except for most drinks in pubs. Increasing the non-draught rates of alcohol duty while reducing draught rates will encourage responsible drinking in social, controlled settings.”
It added: “The Government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) by 1.7%, so that an average ABV strength pint will pay 1p less in duty.
“The Government will also increase the discount provided to small producers for non-draught products, and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief.
“Alcohol duty rates on non-draught alcoholic products will increase in line with RPI inflation. These measures will take effect from 1 February 2025. The current temporary wine easement will also end as planned on 1 February 2025.”
On ‘guest beers’, the Government will consult on ways to ensure small brewers can retain and expand their access to UK pubs and maximise drinkers’ choices, including through provisions to enable more ‘guest beers’.