The UK's alcohol duty was reformed from 1 August 2023, removing some of the differentials in rates that existed between types of alcohol - in arguably the biggest reform of duty for nearly half a century.
With the exception of products with an alcohol by volume (ABV) range of between 3.5% and 8.4%, the rate of duty to be paid now depends entirely on the alcoholic strength of the product, regardless of alcohol type. In the mid-strength range, the rates depend on a combination of alcoholic strength and product type.
Following the Autumn Budget 2024, the government increased the alcohol duty rates that apply to all non-draught products in line with retail price index inflation. The below rates apply from 1 February 2025.
|
Alcoholic strength |
Rate of duty per litre of alcohol in the product |
|
| 0% - 1.2% | £0.00 | |
|
1.3% - 3.4% |
£9.61 |
|
|
3.5% - 8.4% |
Still cider Sparkling cider of < 5.5% |
£10.02 |
|
Beer |
£25.67 |
|
|
Spirits, wine and other fermented products Sparkling cider of > 5.5% |
£25.67 |
|
|
8.5% - 22% |
£29.54 |
|
|
> 22% |
£32.79 |
|
The differentiation between product types in the mid-strength range has been maintained because the government believes that to introduce full equalisation would have a significant impact on the costs faced by some industries. In particular, the differential between beer and cider is maintained to avoid detrimental effects on cider producers.
These rates are subject to specific reliefs for draught products and small producer products.
Draught relief
Draught relief is designed to provide a lower alcohol duty on these products being sold in the on-trade, such as pubs and bars. This is achieved by discounting the duty rates by 13.9% for qualifying beer and cider. The duty discount for qualifying wine, spirits and other fermented products is 26.9%. Since the relief is only available to products with a maximum ABV of 8.5%, this relief is of limited consequence for most wine, spirits and other fermented products.
Draught relief applies where the relevant products are contained within a large draught container that either incorporates or is designed to connect to a pressurised gas or pump delivery system. In the final response to its consultation on the changes (39-page / 328KB PDF), the government confirmed that it intended this definition to apply to “bag in box” containers that had dual use, such as the ability to connect to such a delivery system even if the drink could also be dispensed without, for example, directly from the container using gravity only. The important characteristic is that it is “designed” to be so connected rather than the actual method of dispense.
The relief is available when the product is contained in a “draught container” over at least 20 litres. This small container size is intended to ensure that craft and micro-breweries can access the relief.
HMRC guidance also confirms that this relief is not available for takeaway drinks bought from pubs and bars. There had been some pressure from the industry to allow draught drinks that are dispensed within the on-trade but for consumption elsewhere to be incorporated into this relief. However, the legislation prevents the lower duty from applying to takeaway drinks by introducing a prohibition on “repackaging” other than by authorised persons.
A producer that intends to sell takeaway drinks in this way can elect to pay duty at the full rates on a container that would otherwise qualify for draught relief, thereby reducing the administrative burden.
|
Alcoholic strength |
Rate of duty per litre of alcohol in the product |
|
| 0% - 1.2% | £0.00 | |
|
1.3% - 3.4% |
£8.28 |
|
|
3.5% - 8.5% |
Still cider Sparkling cider of < 5.5% |
£8.63 |
|
Beer, spirits, wine and other fermented products Sparkling cider of > 5.5% |
£18.76 |
|
Small producer relief
Small producers may be eligible to pay a lower rate of alcohol duty across any alcohol product with an ABV of less than 8.5%. To be eligible for small producer relief, producers must fulfil the following conditions:
- products made in the previous production year must contain 4,500 hectolitres or less of pure alcohol;
- the producer must reasonably expect that products made in the current production year will contain 4,500 hectolitres or less of pure alcohol;
- less than half of the total alcohol made in a production year is made under licence.
When the small producer relief applies, a discount on the duty payable is available. The discount applies to either the main rate or the rate already reduced by the draught relief. The amount of the discount depends on the number of hectolitres produced per year, with higher discounts, up to 100%, applying to the smallest producers. There are limitations to the relief designed to ensure that it is targeted towards genuine small producers, for example it is not available for any product that is produced under licence.
Producers must check their eligibility for the relief at the end of every production year, and must have estimated their alcohol production for the next production year, before calculating the discounted rates.
Temporary relief for wine
A temporary relief for alcohol duty on wine products came to an end on 31 January 2025. Since 1 August 2023, wine products with an ABV of between 11.5% and 14.5% had been charged at a single duty rate as if the strength were 12.5% ABV.
From 1 February 2025, the tax on all wine products is now based on how much alcohol the wine contains. All wines with an ABV below 11.5% or above 14.5% were already taxed according to their alcoholic strength.
Approval, payment and return processes
From 1 February 2025, all entities involved in the production of alcoholic products in the UK must hold an alcoholic products producer approval (APPA). This replaced the existing regime-specific approval processes. The new approval application can be made using an online form, but previous plans to develop a dedicated online facility for APPA applications were abandoned in January 2025. Existing separate approvals were automatically transferred into APPAs from 1 February 2025.
Under the previous regime, brewers could register to store beer under duty suspense at “adjacent premises”, interpreted as meaning no further than 5km from the production site. Under APPA, the adjacent premises rule was removed and there is no longer a geographical limit on where the premises may be located within the UK.
Producers must include the address and plan of all premises to be approved in their APPA application, including premises where the producer is expected to hold in duty suspense.
From 1 March 2025, producers and importers must use the alcohol duty online service to submit a single return covering all of their alcohol products and premises, and pay duty once. Returns are due on the 15th day of the month and payment on the 25th. Penalties accrue if the monthly return is not submitted on time, if payment is late or if the returns are inaccurate. From 1 September 2025, interest also accrues on late paid alcohol duty.
Future developments
The government had committed to running a consultation in 2023 on the definition of cider, including: whether the upper 8.5% ABV limit should be retained; allowing fruit additives or other flavourings; and raising the minimum juice requirement. However, this consultation has been delayed.
Ministers also plan to keep the 3.5 to 8.5% ABV bands under review, specifically with regard to whether producers tend towards “upwards reformulation” of products in this range. This commitment has been made in response to public health concerns about beer and cider in the upper end of this range.
The government has also stated that it is considering whether to apply the harmonised penalty regime, which has been implemented for VAT, to alcohol duty. Again, it will give at least 12 months’ notice of doing so.
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