The alcohol duty system in the UK is a regulatory framework that governs the taxation and control of alcoholic beverages within the country. At Spring Budget 2023 the Chancellor confirmed changes to the structure of the Alcohol Duty system, and from August 1st 2023, a new alcohol duty system will be implemented. The main goals of this reform are to simplify the complex system, establishing a more rational and consistent alcohol taxation framework, and reduce the administration burden on producers. Producers, importers and resellers of alcoholic products have until 1 August 2023 to prepare for the changes to the Alcohol Duty structure and the new reliefs:
Simpler Alcohol Duty system:
The key change is the introduction of standardised tax based on alcohol by volume (ABV), replacing the current system that has separate bands for each product category. Additionally, the new system will calculate duty liability/litre of pure alcohol, whereas the current system uses different methods for beer, cider, wine and spirits.
Small Producer Relief:
Small Producer Relief will replace Small Brewers and will extend to cover small producers under 8.5% ABV, with a revised production limit.
A new relief is introduced for products under 8.5% ABV sold on draught, provided they meet specific packaging and dispensing criteria.
Transitional arrangements for producers and importers of some wine products:
In response to industry feedback, a transitional provision is included for wine between 11.5% and 14.5% ABV, treating it as if it were 12.5% ABV for duty calculation purposes, for a temporary period of 18 months.
Introduction of new tax codes:
Changes in the new alcohol duty system also include the introduction of new tax type codes, increasing the total from 35 to 49. Notably, 30 of these new codes are related to products eligible for Small Producers Relief, Draught Relief, or both. The new code structure new code structure no longer specifies whether products are produced domestically or imported.
Overall, the reform aims to simplify alcohol duties, establish consistency, and reduce administrative burdens.
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