Chancellor Rachel Reeves decided to cut the duty on draught alcohol in a bid to provide the UK’s struggling pubs and bars with a vital lifeline.
She said: ‘Nearly two-thirds of alcoholic drinks sold in pubs are served on draught, so instead of uprating these products in line with inflation, I am cutting draught duty by 1.7%, which means a penny off the pint in the pub.’
However, she announced that the alcohol duty rates on ‘non-draught products’ will increase in line with the Retail Price Index (RPI) from February 2025.
The RPI is a measure of inflation published monthly by the Office for National Statistics, and it currently stands at 2.7%.
That means the tax on all wine and spirits sold in the UK is poised to rise by 2.7%, dealing a blow to wine drinkers and the wine industry.
During her Autumn Budget speech, Reeves revealed that UK inflation will average 2.5% in 2024, according to new calculations from the Office for Budget Responsibility (OBR).
The OBR also expects inflation to remain above the government’s 2% target until 2029, so the tax on wine and spirits is due to increase substantially in the years ahead if inflation-linked duty rises remain in place.
Miles Beale, chief executive at the Wine & Spirit Trade Association, called the decision ‘a real kick in the teeth for both businesses and consumers’.
He added: ‘Recent history has shown us that duty increases lead to price rises for consumers, a dip in sales and,
