Yahoo Finance UK tax cut for pints and prosecco as 'pubs guarantee' comes into force
Tax on pints, prosecco and other alcoholic beverages has been cut for UK pubs from Tuesday, with certain drinks on draught now up to 11p cheaper than supermarket equivalents.
The update in the system of how alcohol is categorised means that drinks are now taxed by strength, also lowering costs on supermarket shelves. There are now six categorisations for drinks rather than the previous 15 possible options.
Products below 3.5% alcohol by volume (ABV) in strength will be subject to lower tax. All drinks above 8.5% ABV will pay the same rate regardless of product type.
Prosecco drinkers will also be able to raise a flute to the end of premium rates on sparkling wines.
The Treasury did not immediately respond to Yahoo Finance UK's request for clarification on whether this will mean an increase in duty on any alcoholic drinks with higher ABV.
The moves come at a time of growth for the UK alcoholic drinks market, which reached just under £50bn in 2022. That was up 6% year on year — sales are forecast to reach £60.9bn in 2026.
The so-called "pubs guarantee", announced in the Autumn budget 2021 by then chancellor Rishi Sunak, is designed to help pubs compete on a level playing field with supermarkets and simplify the system, according to a government release.
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"Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country," said the teetotal Sunak.
“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.”
A new levy cut, dubbed the Small Producer Relief, also comes into effect on Tuesday. This replaces and extends the previous Small Brewers Relief scheme and allows small businesses who produce alcoholic products with an ABV of less than 8.5% to be eligible for reduced rates of alcohol duty on qualifying products.
It remains to be seen whether the duty alterations will be handed down to pub customers, as the cost of living squeeze continues to hammer UK purse strings.
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