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Treasury loses £298m after spirits tax hike

The Treasury has lost nearly £300 million (US$393m) in tax revenue over the past year after spirits duty in the UK rose by double digits.

Scotch hisky
The UK government imposed the biggest rise in spirits tax for the past five decades in August 2023

The industry faced the biggest alcohol tax hike in nearly 50 years on 1 August 2023, with spirits duty increasing by 10.1%.

New figures from His Majesty’s Revenue and Customs (HMRC), released by trade body the Scotch Whisky Association (SWA), showed that excise duty from spirits generated £3.951 billion (US$5.18bn) from 1 August last year to 31 July 2024.

This was down from the previous 12 months when revenue reached £4.249bn (US$5.57bn), a loss of £298m or £800,000 (US$1bn) a day.

The SWA said the UK has the highest level of excise duty on spirits of the G7 countries and the fourth largest in Europe – double that of France and four times higher than the US.

Earlier this month, the trade body revealed the UK’s double-digit duty rise on spirits resulted in an extra £2.3bn (US$2.9bn) in government interest payments.

Mark Kent, chief executive of the SWA, said: “The Treasury has now lost more than a quarter of a billion pounds because of the previous chancellor’s decision to increase tax on Scotch whisky and other spirits. It has been a calamitous decision, which has cost the Treasury money that could have been used for public services. It has stoked inflation, and it has hurt business, hospitality and households.”

With a new Labour government in control, the SWA is calling on UK chancellor Rachel Reeves to cut spirits tax in the upcoming budget on 30 October.

“We urge the chancellor to use the budget to reverse the economic damage caused by her predecessor and deliver on the prime minister’s commitment to back Scotch whisky distillers to the hilt, and in turn boost growth in Scotland,” Kent added.

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