Alcohol duty costs Treasury £436m

HMRC data published today (21 February) shows that the Treasury lost £436 million (US$550m) through spirits excise receipts since September.

Excise receipts for wine and spirits between September 2023 and January 2024 are £436m lower than figures from the same period in 2022-23.

In addition, according to The Wine and Spirit Trade Association’s (WSTA) Market Report – which uses NIQ data from the 12 weeks leading to 30 December 2023 – spirit volume sales were down by 7.1% in 2023 in comparison with 2022, while the average price for a bottle of gin in January 2024 – according to ONS data – was £17.11, up by 6% from the previous year.

The 10.1% spirits tax rise has been blamed by many within the UK spirits trade for causing high alcohol inflation levels at the start of the year, which are now four times the UK government’s target.

WSTA has emphasised that an alcohol duty cut in the upcoming spring budget (6 March) will help curtail further inflation and boost revenue to the Exchequer, in a period where the industry is on its feet.

The hospitality sector accounted for 12% of UK administrations filed last year, while the Night Time Industries Association (NTIA) revealed 396 nightclubs across the UK closed between March 2020 and December 2023. Licensed venues in Britain also dipped below 100,000 for the first time since 2003.

Miles Beale, chief executive of WSTA, said: “Last year’s punishing duty increases have had an immediate and negative impact on the amount of wine and spirit sold in the UK. Not only has this hurt British businesses, it has fuelled inflation and significantly reduced excise duty receipts to the Exchequer.

“Recent history has shown that cutting excise duty can lead to increased sales, prevent further price rises for consumers and bring in more revenue into the Exchequer. We are calling on the chancellor to do himself – and everyone else – a huge favour by cutting alcohol duty.”

Calls for Jeremy Hunt to cut alcohol duty are getting louder as the industry nears the spring budget, which the chancellor will deliver at 12.30pm on 6 March.

Ten spirits makers in the UK have written to the chancellor urging the change, while Raissa de Haas, co-founder of Double Dutch, has also called on the government to reduce the UK hospitality sector’s VAT to 10%. Yesterday the NTIA partnered with the Institute of Hospitality to launch a campaign to support all areas of the industry.

In the previous budget, Hunt froze alcohol duty until 1 August 2024, however Mangrove Global managing director Nick Gillett said the move was not enough, stating that the UK government “fails to understand” the needs of the spirits and hospitality industries.