Alcohol duty: Chancellor Kwasi Kwarteng scraps planned increase

Chancellor Kwasi Kwarteng has scrapped planned increases in the tax paid on beer, wine, spirits and cider.

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

A new alcohol duty system, announced by Mr Kwarteng's predecessor Rishi Sunak, will be implemented from 1 August 2023.

Announcing the plans, Mr Kwarteng said it was wrong to raise duty "at this difficult time".

"Our drive to modernise also extends to alcohol duties," he said during his speech in the House of Commons setting the mini-budget.

"I have listened to industry concerns about the ongoing reforms."

Cuts to duty on draught beer and cider by 5%, introduced to help pubs hit by pandemic closures, will be extended from February 2023 to cover kegs as small as 20 litres.

This will "help smaller breweries," Mr Kwarteng said.

He also announced an 18-month transitional measure for wine duty, while the government reforms the system.

Alcoholic drinks are classed into five different tax categories - covering beer, cider, wine, sparkling wine and spirits.

There are 15 different tax rates based on type of alcohol, strength and production method. Under the new system this will be reduced to six rates.

Prior to 2010 the Labour government applied were committed to increasing alcohol duty rates each year in real terms - known as the duty escalator. This was scrapped by the coalition government in 2010.

The Office for Budget Responsibility (OBR) forecast that alcohol duties were expected to raise £12.7bn this year.