Chancellor Rachel Reeves decided to cut the duty on draught alcohol in a bid to provide the UK’s struggling pubs and bars with a vital lifeline.
She said: ‘Nearly two-thirds of alcoholic drinks sold in pubs are served on draught, so instead of uprating these products in line with inflation, I am cutting draught duty by 1.7%, which means a penny off the pint in the pub.’
However, she announced that the alcohol duty rates on ‘non-draught products’ will increase in line with the Retail Price Index (RPI) from February 2025.
The RPI is a measure of inflation published monthly by the Office for National Statistics, and it currently stands at 2.7%.
That means the tax on all wine and spirits sold in the UK is poised to rise by 2.7%, dealing a blow to wine drinkers and the wine industry.
During her Autumn Budget speech, Reeves revealed that UK inflation will average 2.5% in 2024, according to new calculations from the Office for Budget Responsibility (OBR).
The OBR also expects inflation to remain above the government’s 2% target until 2029, so the tax on wine and spirits is due to increase substantially in the years ahead if inflation-linked duty rises remain in place.
Miles Beale, chief executive at the Wine and Spirit Trade Association, called the decision ‘a real kick in the teeth for both businesses and consumers’.
He added: ‘Recent history has shown us that duty increases lead to price rises for consumers, a dip in sales and, as a result, fewer receipts for the Treasury...’
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