Budget 2021: Here’s What Rishi Sunak’s Alcohol Tax Revision Means for Drinkers

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A £3 billion tax grant is part of a major overhaul of the UK’s alcohol tax system. Rishi Altar Under the principle of “the stronger the drink, the higher the ratio”.

the chancellor said his budget this would include cutting the price of a pint at a bar by 3p as part of a new lower tax rate.

The Chancellor told MPs in his Budget speech that the planned increase in spirits such as Scotch whiskey, wine, cider and beer will be canceled from midnight.

New taxes based on the strength of the drink will increase taxes on some high-alcohol products, such as some red wine and white cider.

However, consumers of certain lower-strength products, such as juice, liquor, beer and wine, will pay less.

Sunak said this would result in the largest beer tax cut in 50 years and the biggest cut to the cider tax since 1923.

What is happening?

Altar criticized the current system of alcohol taxes as outdated and too complex, as it introduced a number of changes.

The Treasury said it will cut the main tax rates from 15 to six as part of the sweeping changes.

Sunak said that in addition to the policy of “the stronger the drink, the higher the rate”, tax reductions will be made on champagne, prosecco and other sparkling wines by targeting the “irrational” tax level of 28% on sparkling wine. typically of lower strength.

The Treasury said pubs and bars would also benefit from a new “draft relief” that would lower taxes on beer and cider sold in bars by the most since 1923.

A new Small Brewers Relief has also been announced, extending a similar tax subsidy to Small Brewers Relief to those making cider and other spirits less than 8.5 ABV across the UK.

Altar claimed in his speech that Brexit had allowed him to make sweeping changes.

“We’re taking advantage of leaving the EU to announce the most radical simplification of alcohol taxes in over 140 years.”

“Today we are taking five steps to create a simpler, fairer and healthier system.”

What did the critics say?

The cuts will save voters from dealing another blow to their incomes at a time when inflation is at its highest in almost a decade and some people are facing lower wages as businesses were forced to close during the pandemic last year.

Labor MPs argued that the cuts would mean little compared to the loss of income from not continuing the increase in Universal Credit allowance.

Ian Mulheirn, director of UK policy at the Tony Blair Institute, said: “While the Chancellor trumpeted the newly discovered ‘Brexit liberties’ to reform alcohol taxes, he did not mention that Brexit has reduced tax revenues by nearly £30bn annually. This is the Brexit shocker. It means that most of the £40 billion tax crackdown from last year would have been unnecessary if it weren’t for it.”

What does it actually mean for drinkers?

The Treasury has put together a visual breakdown of what the reforms mean for beer, cider, wines, spirits and other beverages.

The biggest savings on the bar were among the fruit apples—Strongbow Dark Fruits will see 13p knocking over a pint in the quest.

But a 2.5-liter bottle of high-strength cider like Frosty Jack’s would go as high as 45p when purchased from a store.

A 75cl Taylor’s port bottle will also jump £1.09.

What did the industry say?

Bars in Britain have faced some of the strictest restrictions of any industry during the pandemic, including months of mandatory closures, curfews and the requirement that drinkers be served only if they order a substantial meal.

Miles Beale, CEO of the Wine & Spirit Trade Association, said: “The decision to freeze the wine and spirits tax has been a huge relief for British businesses, the hospitality industry and consumers, including the supply chain, and has given everyone so much – to help them recover from the pandemic. they needed a break.

“Chancellor Rishi Sunak should be commended for listening to our calls for support and understanding that penalizing tax increases is not the best way to revive the industry.

“By providing the UK wine and spirits sector with continued respite, their actions will help save jobs and – over time – renew revenues to the Treasury through growth in our potentially-filled sector.”

Emma McClarkin, CEO of the British Beer & Pub Association, said: “Bars, brewers and beer drinkers will toast the Chancellor today for a range of business improvement measures.

“Bar-goers will also toast the Chancellor today for announcing a 5% lower tax rate on £62m worth of draft beer.

“This is great news for our local bars and they recognize the important role they play in our economy and society.

“However, the overall beer tax rate in the UK remains among the highest in Europe.

“Reducing not only draft beer taxes in pubs but also the overall beer tax burden is vital for Britain’s brewers, a world-class homegrown success story.”

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