UKHospitality urges Government to enhance duty reforms to boost sector’s recovery

By James McAllister

- Last updated on GMT

UKHospitality urges Government to enhance alcohol duty reforms to boost sector’s recovery

Related tags Alcohol duty Reform Government ukhospitality

UKHospitality has called on the Government to expand its planned reforms to the alcohol duty system to help further support beleaguered businesses as they recover from the pandemic.

Chancellor Rishi Sunak announced what he described at the time as the 'biggest changes to the way drinking is taxed in more than a century' in his last Budget​, which will come into force in 2023 and include plans to reduce the rate of duty on draught drinks; and introduce a new system based on the principle that the higher the alcohol content, the higher the rate.

UKHospitality has previously heralded the reforms. However, in its response to a Government consultation, the trade body is urging the Government to go further and faster in its reforms, particularly when it comes to draught beer and cider.

Currently the 5% cut to draught duty will only apply to products in 40-litre plus containers, but UKHospitality is asking that it be expanded so containers of 20-litres plus are brought into scope.

The response also sets out the case for the relief’s application to be brought forward to this autumn, and to rise to at least 20% to help further support businesses that primarily rely on drinks sales.

Other asks include the Government looking at a reduced rate of duty for other products and package types sold through hospitality businesses; and for the administrative burden of complying with the excise duty to be further streamlined.

“Streamlining the system is a positive measure, underpinned by rational thinking and we particularly applaud the introduction of a reduced rate of duty for draught beer and cider, products sold almost exclusively through hospitality venues," says Kate Nicholls, UKHospitality chief executive. 

“In the face of the cost-of-living crisis, it will be important for operators to keep the price of drinks for consumers as low as possible, particularly as operational costs continue to soar and, come this April, the industry will be hit with a triple whammy of increased VAT, business rates, and labour costs. This will inevitably result in price rises across the sector and prove particularly damaging to pubs, restaurants and hotels that rely heavily on drinks sales.

“As well as this alcohol duty reform to help support the sector, we are also urging the Government to keep the current lower rate of 12.5% VAT for the sector permanently for food, non-alcoholic drinks, entry fees and accommodation.”

Cost of wine to rise

UKHospitality's statement comes as Wine Drinkers UK warns that Sunak’s proposed changes to alcohol duty could see the cost of a bottle of wine rise by an average of 38p.

As per the proposal, tax duties on wine over 11.5% ABV would rise, meaning around 80% of all still wines enjoyed in the UK would be more expensive.

While the consultation period for the Governments Alcohol Duty Review closed on Sunday (30 January), Wine Drinkers UK have called for the review to rectify the tax on wine, which it says has seen faster and higher tax increases than other alcoholic beverages over the last few years, through the launch of its Cut Back Wine Tax campaign.

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