Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made on the potential impact of changes to alcohol duty reforms on the (a) pub and (b) hospitality sector.

Following public consultation, a new duty structure for alcohol products was introduced in August 2023.

The alcohol duty system taxes all alcohol products according to their strength, so the duty owed increases with alcohol content. The system is also progressive, ensuring that higher strength products pay proportionately more tax

The 2023 reforms significantly reduced previous inconsistencies in treatment between different types of alcohol product and introduced two new reliefs: Draught Relief (DR); and Small Producer Relief (SPR).

DR enables products served on draught below 8.5 per cent alcohol by volume (ABV) to pay less duty. This relief provides support to pubs and other hospitality venues, as well as helping producers of eligible products.

At Autumn Budget 2024, the Chancellor made DR more generous by cutting draught rates by 1.7%, taking a penny of duty off a typical strength pint.

SPR replaced and extended the previous Small Brewers Relief. SPR supports SMEs and new entrants by permitting smaller producers who make 4,500 hectolitres or less of alcohol per year to pay reduced duty rates on all products below 8.5 per cent ABV.

HMRC plans to evaluate the new rates and structures three years after the changes took effect on 1 August 2023.  This will allow time for HMRC to gather a broad range of data. The Government welcomes evidence from industry on the impact of the changes so far.