Spirits: Government Assistance

Alcohol duty is a reserved matter.

The reformed alcohol duty system was introduced in August 2023 and taxes alcohol in a progressive manner, ensuring higher strength products pay proportionately more duty. This approach is supported by public health exports including clinical advisors to the Department of Health & Social Care and the Chief Medical Officer.

Small Producer Relief (SPR) was introduced alongside the reforms and allows small producers to pay a reduced duty rate on products below 8.5 per cent alcohol by volume (ABV). Retaining a strength limit for SPR is important as it aligns the relief with the Government's public health objectives and the new simplified band structure. Small spirits producers are able to claim the relief on any goods they make below this level, such as pre-mixed spirits.

At the recent Budget, the Chancellor announced that she would uprate alcohol duty in line with RPI inflation on 1 February 2025, except on qualifying draught products. This decision weighed the impacts on businesses, cost-of-living pressures on people who drink moderately and responsibly, and the public health case for higher duties to tackle increasing alcohol-related deaths, as well as economic inactivity.

However, to support UK spirits producers, the government will invest up to £5 million to support the delivery of the Spirits Drinks Verification Scheme administered by HMRC. This scheme helps spirits producers, such as UK whisky distilleries, verify their products against protected geographical indicators. Further, alcohol duty stamps scheme will end from 1 May 2025, reducing the administrative burden on spirit producers and importers.