Alcohol tax duties: How much will you save on beer, wine, Prosecco and cider?

Rounds at the pub are set to be ever so slightly cheaper after Rishi Sunak announced a cut to some alcohol duties in the Budget.

The new measures will see certain drinks – such as beer, Prosecco and fruit cider – fall in price, while the cost of others will see a ‘small increase’ in a bid to ‘end the era of cheap high strength drinks’.

The Chancellor’s aim is to simplify the alcohol tax system, which he has said is ‘outdated and full of historical anomalies’.

There are currently 15 different brands of taxation across beer, cider, wine and spirits – but these will now be cut to just six, in what he referred to as ‘the most radical simplification for 140 years’.

So just how much will you save on certain alcoholic drinks, which ones are likely to cost more – and when will the changes be introduced?

Beer/Cider

The price of a pint is set to fall by around 3p as a result of the new duties.

This will also apply to cider.

Mr Sunak told the Commons: ‘It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs who do 75% of their trade on draught.

‘Let me tell the House the new rate: draught relief will cut duty by 5%.

‘That’s the biggest cut to cider duty since 1923. The biggest cut to fruit ciders in a generation. The biggest cut to beer duty for 50 years.

This is not temporary, it’s a long-term investment in British pubs of £100 million a year. And a permanent cut in the cost of a pint by 3p.’

Wine

While the price of beer may fall, the cost of some wine is set to rise, given that prices will be higher depending on the strength of the drink.

Mr Sunak explained: ‘The stronger the drink, the higher the price.

‘This means that some drinks, like stronger red wines, fortified wines, or high-strength white ciders will see a small increase in their rates because they are currently undertaxed given their strength.

He went on: ‘That’s the right thing to do, and it will help end the era of cheap, high-strength drinks which can harm public health and enable problem drinking.’

By contrast, wines with a lower alcohol content, such as rose, will be taxed less.

Prosecco/sparkling wine

Drinks such as Prosecco have previously been more expensive than wine, with drinkers paying a 28% duty premium on these.

However this is now set to be cut – although it’s not yet been confirmed by how much.

Mr Sunak cited an increase in the number of people now drinking sparkling wines – saying they were ‘no longer the preserve of wealthy elites’.

The move is likely to also give homegrown drinks producers a boost, since many UK-based companies produce lower-strength and sparkling wines.

Spirits

While many may benefit from lower prices, higher-strength spirits such as whisky and gin are likely to see their price go up, given the duty taxes drinks according to their strength.

However, whisky drinkers will benefit in the short-term, as a planned increase in duty on the spirit has been cancelled, as of midnight tonight.

Mr Sunak said: ‘I can confirm today that the planned increase in duty on spirits like Scotch Whisky, wine, cider and beer, will all, from midnight tonight, be cancelled. That’s a tax cut worth £3bn.’

It’s not yet been announced how much more they could cost but some pre-Budget reports estimated it could add 50p to the cost of a bottle of spirits.

When will the changes come in?

We’re making sweeping reforms to our outdated alcohol duty system. Introducing a new system that is simpler, fairer, and healthier – as well as permanently cutting the cost of a pint by 3p.
Watch this video to learn more.#Budget2021 #SpendingReview pic.twitter.com/yFchSPwA6R

— HM Treasury (@hmtreasury) October 27, 2021

The changes announced today will be introduced in February 2023.

The announcement comes after warnings the £6 pint could become commonplace in London and the south-east.

More than eight in 10 pubs have increased their prices or plan to, as the industry recovers from the effects of the pandemic.

The UK lost almost 1,000 pubs and restaurants in the three months after restrictions were lifted, according to new figures.

Many have been forced to increase wages as the hospitality sector is plagued by a shortage of staff with 134,000 vacancies.

MORE : Autumn budget 2021: How Rishi Sunak’s plan could affect your holiday

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