Scotch forced to invest outside of the UK
A survey has revealed Scotch companies are planning to invest outside of the UK due to the country’s high spirits tax.
Research carried out by the Scotch Whisky Association (SWA) between February and June of this year found that 75% of Scotch whisky companies are considering pulling back on investing in the UK and instead looking to focus spending outside of their home base due to the high tax burden placed upon them by the UK government.
The 10.1% hike on spirits duty was implemented on 1 August 2024, and was increased by a futher 3.65% in the autumn budget, meaning UK consumers are paying at least £12 (US$15) of tax on every bottle of Scotch whisky.
The double-digit hike has reportedly cost the Treasury £500,000 (US$607,000) a day in revenue since it came into effect.
Mark Kent, SWA CEO, said: “The Scotch whisky industry has a long track record of investment and growth that has benefitted communities across Scotland and the supply chain across the UK. It is also an optimistic and confident sector that believes in creating future growth.
“However, the positivity of the industry is being severely tested by the relentless impact of domestic policies and global circumstances. The industry is facing the significant challenge of US tariffs and increasing domestic pressures at a time it would otherwise be looking to support the prime minister’s growth mission.
“This high tax burden is not delivering the expected additional revenue for the government, but it is costing jobs and investment. At a time when the country needs economic growth, we cannot fail to back one of the UK’s longstanding successes.”
Jobs at risk
According to the survey, a majority (87%) expect the excise duty on spirits to rise again in this year’s autumn budget, which is expected to be announced in late October or early November.
SWA members believe that another increase in spirits tax will force them into making job cuts.
A quarter of companies are expecting to reduce their workforces due to the high duty level, while further job losses could also happen across the supply chain from other economic headwinds, such as the lowered production levels resulting from the global tariffs that have impacted exports.
The strain upon the industry in the UK has been exacerbated after April’s increases on national insurance contribution fees, plus implementation of the Extended Producer Responsibility for Packaging (EPR) scheme.
At the start of 2025, half of the surveyed members expected an increase of 10% to their operating costs from government policies, however 40% now expect that figure to be more than 20%.
SWA added that despite the tax hikes, HMRC data shows that Treasury spirits duty receipts have not increased and failed to deliver the forecasted revenue growth.
The Scotch industry is said to employ or support more than 66,000 jobs across the whole UK.
Related news
Argentina recognises Scotch with ‘first ever’ GI
