UK government announces duty freeze on spirits, wine and beer

03 March, 2021

The UK government has announced a second consecutive duty freeze on spirits, wine, beer and cider.

Chancellor Rishi Sunak delivered the good news during a landmark budget announcement at Westminster this afternoon.

He also announced that the 100% business rates exemption will be extended from April to June, while the furlough scheme has been extended up the end of September.

“This budget lays the foundations of our future economy,” said Sunak.

Overall, the UK government has announced an additional £65bn of measures to support the economy.

“Taking into account the significant support announced at [our] spending review [in] 2020, this means our total Covid support package, this year and next, is £352bn,” added Sunak.

The UK economy is now forecast to return to pre-Covid levels by the middle of 2022. Annual growth is expected to rebound by 4% this year, followed by 7.3% growth in 2022.

Scotch Whisky Association chief executive Karen Betts, said: “The freeze on duty announced by the Chancellor is good news for hospitality and gives distillers some breathing space in the face of some of the worst trading conditions anyone can remember - caused by a combination of US tariffs, the coronavirus pandemic and the end of the Brexit transition period. 

“What’s really important to us is that the government redoubles its efforts to resolve the 25% tariff imposed by the US on Single Malt Scotch Whisky. This stems from an unresolved trade dispute between the EU, UK and US governments over subsidies to aerospace in breach of WTO rules. It is causing real damage to our US exports, which have fallen by over half a billion pounds since the tariff came into effect. And it risks impacting permanently Scotch Whisky’s market share in the US, which has long been one of our most successful markets.

“The Chancellor must also set out a clear timetable for the reform of the UK’s outdated system of alcohol taxation. Now the UK has left the EU, we can modernise and reform the duty system to ensure that it is clear and fair both to businesses and consumers.”

Miles Beale, chief executive of the Wine & Spirit Trade Association, said the duty freeze would allow businesses to “recover, rebuild, create jobs and - in time – replenish revenues to the Treasury” and will keep prices down for cash-strapped consumers.

“The decision to freeze wine and spirit duty comes as a huge relief for British businesses, pubs, restaurants and its suppliers following the crushing – and continuing - closure of the hospitality sector, for months on end, during the pandemic,” said Beale. 

“Chancellor Rishi Sunak seems to 'get it'. He understands that supporting our industry will allow it to recover, rebuild, create jobs and - in time – replenish revenues to the Treasury.  He has also shown he is in touch with men and women from all walks of life who want to enjoy their chosen tipple without getting stung by further tax hikes.

“We will all raise a glass to the Chancellor tonight – and look forward to more permanent support for the sector following the review of alcohol taxation.”

Dayalan Nayager, managing director at Diageo Great Britain, added: “We thank the Chancellor for providing much-needed stability by freezing alcohol duty. The last year has been incredibly tough and today’s decision, along with other measures to help the trade, gives the industry confidence to meet the ongoing challenges in these critical last months before reopening.

“Commitments such as Diageo’s £30m, to help pubs and bars operate safely through our Raising the Bar [initaitve], will give even further assurance. We now look ahead to the Alcohol Duty Review and welcome the opportunity to work with government to bring greater fairness to the duty system and spirits producers across the UK.”

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