With the cost-of-living crisis and the ever-growing price of groceries and utilities, it seemed inevitable that, eventually, booze prices would take a hit, too.
A new tax system for alcohol in the UK was announced all the way back in 2021, when now-PM Rishi Sunak was Chancellor of the Exchequer. At the time he called the changes ‘the most radical simplification of alcohol duties for over 140 years’. However, thanks to the cost-of-living crisis and ongoing impact of the pandemic, the government froze alcohol duties for two years.
And now those changes are set to be un-frozen. On August 1 alcohol duty rates in the UK will rise by 10.1 percent, matching inflation. It will be the largest increase in alcohol duty since 1975.
So what is the new system, you ask? Well, alcoholic drinks will be now levied according to their strength – i.e their level of alcohol per volume (ABV). Previously, drinks were simply taxed depending on what category they fell under. According to the Wine and Spirits Association (WSTA), the new system means that the average bottle of supermarket wine could increase by around 44p, a bottle of vodka could go up by 76p and the price of a bottle of port may ramp up by a whopping £1.30.
Miles Beale, chief executive of the WSTA, said that the rises ‘will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.’
But it may not be all bad news. In an effort to minimise impact on the hospitality industry, there will be a ‘draught relief’ – a reduced rate for draught products under 8.5 percent ABV. In other words, pubs will pay less duty per pint than supermarkets. Draught pints of cider or beer that are 4.5 percent ABV or lower won’t see any hike in price at all.
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