Alcohol Duty changes – what you need to know
Alcohol Duty changes – what you need to know
The Alcohol duty landscape within the UK has changed considerably since summer 2023.
Following a consultation, the government introduced considerable changes to the alcohol duty legislation, including the structure of the alcohol product types, duty bands and calculations of excise duty. This amounted to the biggest update to the UK alcohol duty legislation since 1979.
Highlights of the changes introduced from 1 August 2023 are provided below:
The broad scope of the changes means the impact of the reforms will be applicable to most businesses involved in the alcohol trade, including producers and warehouse keepers. As the changes are being phased in over the next two years this is a good opportunity to start planning for keeping your business processes up to date and adapting to changes
SPEAK TO AN EXPERT TODAY
Following a consultation, the government introduced considerable changes to the alcohol duty legislation, including the structure of the alcohol product types, duty bands and calculations of excise duty. This amounted to the biggest update to the UK alcohol duty legislation since 1979.
Highlights of the changes introduced from 1 August 2023 are provided below:
- The duty structure for alcohol was updated to harmonise the methodology used to calculate excise duty liabilities on alcohol products. Previously, products such as Beer, Cider, Wines and Spirits had different methods for calculating excise duty liability. Excise duty is now calculated based on the litres of alcohol in the alcoholic product, and the nature of the alcohol. Those familiar with the historic duty calculation methodology for spirits will be most used to the newer calculation methodology for all products.
- As well as introducing a single calculation method, standardised tax bands for excise duty were introduced across all types of alcohol.
- Small Brewers Relief, which allowed Brewers producing less than 60HL of Beer in 12 months to pay a reduced rate of excise duty, was replaced by Small Producers Relief. This duty relief applies to small producers of all Alcohol goods.
- A new ‘Draught Relief’ reduced the excise duty payable on draught products sold in bulk containers. This was aimed at reducing the tax burden on goods sold within on-trade premises such as pubs and bars.
- A temporary easement for Wine producers and distributors was put in place for 18 months, allowing a lower rate of duty on specific strengths of wine to be paid.
Alcohol duty in the 2024 Budget
During the budget in March 2024, the Government announced a freeze on alcohol duty until August 2024, and announced further changes and updates to the Alcohol regime due to be introduced during 2024 and 2025. They are:- The requirements around gaining an HMRC Excise producer approval will be updated.
- The application method will be digitised with online applications becoming the norm.
- The arrangement for submitting Excise returns and making duty payments will be updated.
- Excise duty stamps will be phased out.
- HMRC will give at least 12 months’ notice of the date the 2024 changes will become effective, to allow producers time to make any required changes to their systems.
The broad scope of the changes means the impact of the reforms will be applicable to most businesses involved in the alcohol trade, including producers and warehouse keepers. As the changes are being phased in over the next two years this is a good opportunity to start planning for keeping your business processes up to date and adapting to changes
How we can help
To have a conversation around excise duty, plan for upcoming changes, request assistance with gaining approvals or defence services in the event of a HMRC audit please contact our team.SPEAK TO AN EXPERT TODAY