Taxes on beer, cider and sparkling wine in pubs are to be reduced as part of a package of measures presented in the budget to revise the taxes on alcoholic beverages and help pubs with the ongoing damage caused by the pandemic.
Drinkers are charged higher prices for stronger drinks and lower prices for weaker ones – a system Rishi Sunak said is “simpler, fairer and healthier” than the one it is replacing.
Some higher proof beverages like red wine and “white cider” attract more taxes, while buyers of lower strength products like rose, fruit wine, liquors and beers and lower strength wines pay less.
Mr. Sunak criticized the current alcohol tax system as being outdated and overly complicated. Fifteen different categories used for alcohol taxation are replaced by six. The changes are expected to be introduced in February 2023.
A planned increase in levies on spirits such as scotch whiskey, wine, cider and beer will be canceled from midnight, saving drinkers a total of £ 3 billion and reducing the cost of a pint by 3 pence, according to Treasury Department calculations.
In order to encourage drinking in pubs and not at home, Mr. Sunak announced “relief from drafts” – a 5 percent reduction in the tariff rate for draft beer and cider from containers over 40 liters.
“It will particularly benefit the community pubs, which do 75 percent of their trade in drafts,” Sunak said.
“This is the biggest cut in cider tax since 1923. The biggest cut in fruit must in a generation. The biggest reduction in the beer tax in 50 years. This is not temporary but a long term investment in UK pubs of £ 100m a year. “
He also revealed that hospitality, retail, and leisure businesses are getting 50 percent off business rates for a year.
All eligible businesses, including shops, pubs and leisure centers, will have tax cuts on their premises up to £ 110,000 for a year, the Chancellor told MPs.
Mr Sunak also said he will make the system “fairer and more timely” starting in 2023, with more frequent re-evaluations every six years.
However, Rishi Sunak has refrained from complying with corporate groups’ desire to revise the largely unpopular tax.
Industry leaders welcomed the changes but said more help was needed to support the sector.
Mike Kill, executive director of the Night-time Industries Association, said he was “disappointed” that the Chancellor decided not to extend the lower 12.5 percent VAT rate to the hospitality industry.
“This is a missed opportunity and it will prevent these projections from improving any further,” he said.
Nik Antona, Campaign Manager for Real Ale (Camra) said: “The introduction of a draft duty rate is a turning point for draft beer drinkers, cider and perry drinkers and the Great British Local.
“This is what Camra has been advocating for for many years, and we are delighted that the government has listened, supported our locals, and introduced the important principle that beer, cider, and perry served in a pub or social club are taxed differently should be bought as alcohol in places like supermarkets. “