Alcohol duty to be frozen for further six months

The government has extended a freeze on alcohol duty for six months.

Chancellor Jeremy Hunt had said in his Autumn Statement that prices would go up in February, reversing a decision made by his predecessor Kwasi Kwarteng.

But the Treasury is now freezing the duty until August 2023 when a new system for calculating taxes on alcohol is also due to come into force.

Lifting the freeze would have added 7p on a pint of beer and 38p on a bottle of wine.

Mr Kwarteng had originally announced the freeze during his short time as chancellor in September, saying he had "listened to industry concerns" over planned rises in the tax during a time when the cost of living is rising at the fastest pace for 40 years.

But after Mr Hunt said the duty would rise in line with retail prices index (RPI) inflation from February, industry leaders were disappointed.

The Scotch Whisky Association said many distillers were "furious" at the move that it said would amount to an average increase of 12% in price, or £1.35p to the average bottle of whisky.

The duty paid on alcohol is revalued each year to keep pace with inflation - though it has been either cut or frozen in every budget since 2013.

Monday's news was welcomed by the hospitality trade, but Michael Kill from the Night Time Industries Association called for more government support for the sector, which over the last few years has been hit by Covid lockdowns, and more recently train strikes leading to cancelled bookings and lower trade.

"The alcohol duty freeze will give businesses some breathing space but will not repair the damage already done or solve the immediate challenges faced by the sector following three years of disruption," said Mr Kill.

Emma McClarkin, chief executive of the British Beer and Pub Association, whose members represent over 20,000 UK pubs, said: "This freeze will allow £180m to be reinvested into our sector at a critical moment and inject a much-needed flurry of festive cheer for pubs and breweries.

"We look forward to working with the government to implement the promised duty reforms in 2023 ensuring a fair and modernised rates system in the UK that support lower-strength products and our country's pubs."

Under new measures being introduced in August 2023, duty will be reduced on all drinks with alcohol content below 8.5%, and a blanket tax of 12.5% will be introduced for wines with alcohol content between 11.5% and 14.5%. The measures will run for 18 months from 1 August 2023 to 1 February 2025.

The government says that by removing "arbitrary" thresholds it will cut red tape for pubs and other small venues.

Treasury minister James Cartlidge told MPs on Monday that the extension would give "maximum certainty" to the industry ahead of challenging times.

But while Labour said the sector would welcome the announcement, the party branded it a "U-turn" and said claims to be providing certainty were "laughable".