Spring Budget 2023: Changes in Alcohol and Tobacco Duty Rates

Alcohol and Tobacco Duty Updates in Spring Budget 2023

Duty Increases on Alcoholic Beverages

In the Spring Budget 2023, the Chancellor confirmed duty rate increases on beers, spirits, wines, and ciders in line with the retail price index (RPI). These adjustments are set to take effect from August 1, 2023.

Support for the Hospitality Sector

The Chancellor announced an increase in the Draught Relief duty differential to aid the hospitality industry. The rate will rise from 5% to 9.2% for qualifying beer and cider products, and for qualifying wine, other fermented products (previously made wine), and spirits, it will go up from 20% to 23%. Effective August 1, 2023, these changes will result in lower taxes on draught products in on-trade venues like pubs than equivalent non-draught products in off-trade outlets like supermarkets.

Duty System Reforms and New Reliefs

From August 1, 2023, reforms to the current duty system will introduce standardised tax bands based on alcohol by volume. In addition, the government will also implement two new reliefs and transitional arrangements for specific wine products.

Tobacco Duty Rate Increases

Tobacco product duty rates increased by 2% above the RPI inflation rate, effective from 6 pm on March 15, 2023. Hand-rolling tobacco duty rates rose by 6% above RPI, and the Minimum Excise Tax (MET) increased by 3% above RPI simultaneously. The government remains committed to using high tobacco duty rates to reduce smoking.