UK freezes spirits duty in 2016 Budget

The Chancellor of the Exchequer George Osbourne has announced a freeze on spirits duty in the UK in his 2016 Budget statement.

Beer and cider duty has also been frozen, however “all other alcohol will rise with inflation as promised”.

The tax and VAT levied on a bottle of Scotch whisky currently stands at 76%.

Last year, the Chancellor cut spirits duty by 2%, the first reduction in almost 20 years.

The Scotch Whisky Association had called for a similar cut in duty this year via its ‘Fair Tax for Whisky: Stand up for Scotch’ campaign.

The Chancellor has introduced a levy on the soft drinks industry to be introduced in 2018. The tax will be levied in two bands: drinks containing more than 5 grams of sugar for every 100g, and drinks containing 8 grams out of every 100g. The tax is expected to raise £520 million, earmarked for sports in schools. It is unclear how this will be implemented for the on-trade.

The Chancellor also announced a number of tax changes for small businesses in the UK, which could aid the bar industry.

Small business tax relief will increase from £6,000 up to a maximum of £15,000 a year. The higher rate threshold has been increased from £18,000 to £51,000.

In addition a £1,000 tax-free allowance for micro-entrepreneurs to be introduced.

Corporation tax will be lowered to 17% by April 2020.

Small businesses purchasing a new property will see stamp duty relief come into effect from midnight tonight (16 March). Stamp duty cut will be cut to 0% for properties worth up to £150,000, up to 5% for commercial properties above £250,000.

The UK spirits industry has largely welcomed the duty freeze, however the SWA has pledged it will “continue to call for fairer taxation of Scotch”.