UK: spirits duty frozen and NI cutBy Melita Kiely
The UK government has cancelled a planned rise in alcohol duty and will reverse the National Insurance increase introduced earlier this year.
Speaking during the UK’s ‘mini-budget’ today (23 September), chancellor Kwasi Kwarteng said alcohol duty on beer, wine and spirits would be frozen from February 2023.
HM Treasury estimated this would save the consumer £1.35 (US$1.50) on a bottle of spirits, 38p (US$0.43) on a bottle of wine, 4p (US$0.05) on a pint of cider and 7p (US$0.08) on a pint of beer.
It is also expected to help hospitality recover.
The reversal of the 1.25% National Insurance increase was welcomed by trade body UK Hospitality. The increase was introduced by former chancellor Rishi Sunak in April 2022. It will be reversed from November 2022.
Kate Nicholls, chief executive of UK Hospitality, said: “Hot on the heels of government support for businesses facing rising energy costs, cutting employer NI contributions (NICs) is more excellent news for the hospitality sector, and will help businesses reduce their costs as they attempt to return to profitability while facing a perfect storm of financial pressures, including the interest rate rise, VAT back to 20%, and the frankly unfair business rates regime.
“Cutting employee NICs is a great way to ensure people keep more of their money, primarily so that they’re able to pay their bills, and then to enjoy affordable luxuries, such as visiting hospitality venues.
“This announcement is particularly welcome, as UK Hospitality has long campaigned for an employer NICs regime that supports job creation, which this move will certainly help towards.”
More help needed
However, UK Hospitality has called for further help to support hospitality businesses.
While the trade body welcomed today’s measures announced in the mini-budget, Nicholls highlighted how these measures would take time to have an impact.
She called on more immediate help for businesses, such as a VAT reduction.
“The stated objectives of boosting growth and tackling inflation rightly put business at the heart of the government’s agenda, but today’s measures will take time to take effect,” Nicholls added. “The Chancellor committed to making the UK a globally competitive tax regime, yet overlooked two obvious levers to achieve that, through lower VAT and business rates reliefs.
“Our VAT rate is the highest in Europe, which is starkly at odds with ambitions for global tax competitiveness and will hopefully be addressed in the autumn Budget, if not before.
“Our VAT rate is the highest among modern economies, so if we want a globally competitive market, we need lower VAT and an equitable alternative to business rates. Without such measures – which would help to keep prices down for customers – thousands of businesses and many more jobs will be lost.
“Confirmation of the energy and NIC proposals will allow our businesses to better plan for survival. Indeed, today’s announcement includes a number of positive measures which will bear fruit in due course, but more is urgently needed to help struggling businesses survive through the winter.
“There’s a clear shortfall between the positive tax plans and the lack of needed immediate business support.”