Taxes on sparkling wine, draught beer and cider are to be cut, but will rise for stronger drinks such as red wine following a shake-up of alcohol duty.
The new system, which is set to go into effect in 2023, will result in higher duty for stronger alcohol, according to the chancellor.
The duty premium on sparkling wines will be eliminated, while the duty on draught beer and cider served in pubs will be reduced.
Chancellor Rishi Sunak referred to it as the “most radical simplification of alcohol duties in over 140 years.”
He also stated that the planned increase in duty on spirits, wine, cider, and beer, which was set to go into effect at midnight on Wednesday, has been cancelled.
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“We are reducing the number of main duty rates from 15 to just six in order to radically simplify the system,” the chancellor said.
“Our new system will be built on a simple premise: the stronger the drink, the higher the rate. This means that some beverages, such as stronger red wines, fortified wines, or high-strength ‘white ciders,’ will see a slight increase in rates because they are currently undertaxed for their strength.”
Many lower alcohol drinks, according to Mr Sunak, are “currently overtaxed,” adding, “Rose, fruit ciders, liqueurs, lower strength beers and wines – today’s changes mean they will pay less.”
In terms of sparkling wines, Mr Sunak stated: “I’m going to put an end to the irrational duty premium of 28% that they currently pay. Sparkling wines, wherever they are produced, will now pay the same duty as equivalent strength still wines.”
Mr Sunak announced a new lower rate of duty for draught drinks, which he said would reduce the cost of a pint by about three pence.
He stated that the “draught relief will reduce duty by 5%” and that it “will apply to drinks served from draught containers larger than 40 litres.”
The chancellor stated that this would be especially beneficial to community pubs, which “do 75 percent of their business on draught.”
He also proposed a new “small producer relief” programme for small cidermakers and other producers of alcoholic beverages containing less than 8.5 percent alcohol by volume (ABV).