Yahoo Finance Budget 2021 alcohol duty: Wetherspoon, Marston’s and other pub shares jump as Rishi Sunak knocks 3p off a pint
Shares in pub companies soared on Wednesday afternoon after the Chancellor announced a reduction in the rate of duty on draught beer and cider in his Budget.
Rishi Sunak announced a 5% cut to the tax on pulled pints in the Autumn Budget - the biggest cut to beer duty for 50 years.
Shares in JD Wetherspoon shot up by as much as 5%; shares in All Bar One owner Mitchells & Butlers by 4.6%; in pubco Marston's by as much as 4.6%; and in London pub company Young's by 1%.
Tim Martin, founder and chairman of Wetherspoons, has long campaigned for supermarkets and pubs to be taxed at the same rate. He told the Standard: “Spirits up, beer down. Hopefully this will add up to an overall tax reduction for pubs compared to the supermarkets.”
There will also be lower duties on prosecco and rose wine under a new, simplified alcohol duty system, Sunak said. The number of rates will be reduced from 15 to 6, with the new system seeing alcohol with higher percentage proofs pay higher tax rates. Spirits duty was also frozen.
The Chancellor said sparkling wines will now pay same duty as still wines of equivalent strength, meaning English and Welsh fizz producers will pay less.
A spokesperson for the UK Spirits Alliance, representing over 260 distilleries, said: “Today we raise a glass to the freeze in spirits duty which comes as a very welcome relief for UK distillers, hospitality businesses and the millions of adults across the UK.
"This decision by the Chancellor will give our vibrant, home-grown industry the much-needed breathing space and confidence to keep investing in growth.
The Chancellor moved to give more business rates support to Covid-hit retail, hospitality and leisure firms.
He used the Budget to update on a number of measures. They include: introducing a new revaluation cycle that will be delivered from 2023; a new investment relief to encourage businesses to adopt green technologies like solar panels.
There will be a new ‘business rates improvement relief’. From 2023, firms will be able to make property improvements, and, for 12 months, pay no extra business rates.
Sunak added: “I’m announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors. Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms.”
Any eligible company can claim a discount on their bills of 50%, up to a maximum of £110,000. Sunak said that is a business tax cut worth almost £1.7 billion.
The government had earlier this year been consulting on plans that would see revaluations of non-domestic properties take place every three years instead of the current system of five.
High street tenants have long complained about the tax, which is linked to the underlying value of a property, but currently based on values from April 2015.
Young's CEO Patrick Dardis said the new announcements will give the sector "breathing space", but said the Government needs to go further.
He told the Standard: "Very welcome news on the 50% discount up to £110,000 on business rates for one year, and simplification and reduction on alcohol duty.
"We really need a permanent reduction on business rates, or indeed a cancellation of the rates.
"But it will give us some more breathing space in the next 12 months, given the huge cost increases on labour, utilities, fuel NI and the obvious increase in inflation."
Sandy Jarvis is managing director of small London pubco, The Culpeper Family Hospitality Group.
Jarvis said the the rates relief will "certainly help". But he cautioned that his team is unsure whether the beer duty cut will offset the surging transportation and production costs the group is facing.
He said: “We're working hard to not have to pass on any costs to our customers."
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