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The Chancellor of the Exchequer has unveiled plans to completely overhaul the UK’s alcohol duty system.

Rishi Sunak revealed plans for a huge shake-up of alcohol duty during his Budget speech in the House of Commons today (27 October), with a package of changes he called “the most radical simplification of alcohol duties for over 140 years”.

This will include slashing the number of main duty rates from 15 to six, with a new system designed around “a common sense principle – that the stronger the drink, the higher the rate”, he said. 

This meant some drinks like stronger red wines and high-strength ciders, which he said were “undertaxed given their strength”, would see an increase, ending “the era of cheap, high-strength drinks”. 

Many lower-alcohol drinks, meanwhile, were “currently overtaxed and have been for many decades”, he added. “Today’s changes mean they will pay less.”

Duty will be cut on fruit ciders and crucially, sparkling wines, which he called “no longer the preserve of wealthy elites”, so that producers will pay the same duty as still wines of equivalent strength. Until now, they have paid a higher premium.

Because growing conditions in the UK favoured lower-strength and sparkling wines, this would be a boon for homegrown producers, Sunak suggested.

English wine supplier Chapel Down CEO Andrew Carter welcomed the news, saying it would “enable the industry to create jobs, support families, and bring even more young talent into this exciting, developing sector as it recovers from the pandemic”.

“The English wine industry – comprising 3,800 acres under vine, 800 vineyards, 178 wineries – is expanding rapidly and governmental support provides the opportunity to build English wine on a global level,” he said. 

The government will also extend the principle of small brewers relief to other categories of booze, Sunak revealed, including cidermakers and other suppliers making drinks of less than 8.5%.

Meanwhile to “support the home of British community life” a 5% duty cut for draught beer in containers of 40 litres or more will be implemented, which Sunak called a “long-term investment” in British pubs. 

To “help the hospitality industry right now”, he added, planned increases in duty on spirits, wine, cider and beer would all be cancelled.

The new rates will kick in from February 2023.

Wine & Spirit Trade Association CEO Miles Beale called the news “a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, giving everyone a much-needed break to help them recover from the pandemic”.

“By offering continued respite to the UK wine and spirit sector his actions will help save jobs and – in time – replenish revenues to the Treasury through growth in our potential-filled sector.”

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