Distillers from across the United Kingdom are to descend on Westminster to demand a duty freeze for spirits in the upcoming budget.
At a spirits showcase organised by the All-Party Parliamentary Group on UK Spirits and the UK Spirits Alliance today (2 September), suppliers will showcase their wares and urge ministers, MPs and peers to back a freeze in alcohol duty.
With successive duty increases having driven inflation, stymied investment and halted sales of “a once-booming” sector, anything other than a duty freeze would “not be enough to save an industry that is already on its knees”, the UK Spirits Alliance said.
“We know that distillers across the country are having a really challenging time, and if we could do one single thing to help it would be a proper duty freeze,” said MP Carolyn Harris, chair of the APPG on UK Spirits. “This is a sector with huge growth and export potential. Rather than stifle it, we need to create the conditions to let it thrive.”
While the recent trade deal struck with India showed prime minister Keir Starmer recognised the importance of spirits to the UK economy, suppliers needed further support at home, Harris added.
High tax burden
UK spirits such as gin, rum, and scotch are the highest-taxed category of alcohol in the UK, with over 70% of the cost of an average bottle claimed by the exchequer.
Alcohol duty increased by 3.65% in line with RPI inflation in February, on top of a 10.1% increase imposed by the previous Conservative government in August 2023. It means that UK spirits duty is now 77% higher than the average across EU member states and the highest in the G7, according to the UK Spirits Alliance figures.
Following the 2023 duty increase, a survey of distillers showed that 70% of distilleries in the UK feared for their ability to invest in their business.
And in July, three-quarters of scotch whisky makers said they were planning to rein in UK investment as a result of increased costs including duty and tariffs.
“We are being hit from all sides,” said Karl and Cathy Mason, directors of Yorkshire distiller Masons Gin. “From National Insurance contributions to excise duty and sustainability requirements, our ability to grow our business is being stifled.
“Distilleries like ours are often family-run businesses. There is a real risk that many of these businesses will simply go bust.”
Support for hospitality
As well as directly supporting jobs, the UK spirits sector was an important part of the wider hospitality ecosystem, the UK Spirits Alliance pointed out.
Spirits made up a third of all alcoholic drinks in hospitality settings, it said, adding nearly two-thirds (66%) of pub owners reported generating higher profit margins from spirits than beer.
Kathy Caton, founder and MD of Brighton Gin, added: “Brighton Gin isn’t just a distillery: we help to grow the local economy, create skilled jobs, drive tourism and lead in sustainability whilst building a global reputation for quality.
“However, successive duty increases have not only led to our artisanal spirits being priced out of local pubs and restaurants, but they’re stifling potential growth.”
An HM Treasury spokesman said: “We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”
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