SWA Applauds UK’s Alcohol Duty Freeze Extension to February 2025

In the most recent Spring Budget announcement, the Scotch Whisky Association (SWA) hailed the decision to extend the alcohol duty freeze until February 2025 as a crucial recognition of the Scotch whisky industry’s significance. 

The SWA lauded the Chancellor’s move, stating that it acknowledges the adverse impact a duty hike would have on not only the Scotch whisky sector but also its supply chain, consumers, and the broader economy, particularly amid ongoing struggles to curb inflation in the UK.

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Details of Whisky Taxation in the UK

The Budget revealed a freeze on duties across all four alcohol categories, maintaining the spirits duty rate at the existing £31.64 per litre of pure alcohol. This freeze means that out of the average £15.63 price of a bottle of Scotch whisky, £11.40 is attributed to taxation through duty and VAT, imposing a hefty tax burden of 73%.

By committing to no further duty increases in August, the Chancellor underscored the importance of supporting Scotch whisky to stimulate growth, enhance revenue, and bolster the iconic hospitality sector.

Read more about how alcohol tax changed in August 2023.

Inequalities in Alcohol Taxation

While this development is undoubtedly positive, it also highlights persisting inequalities in alcohol taxation within the UK

Scotch whisky and spirits remain the most heavily taxed alcohol category, with the former facing a higher tax burden per unit of alcohol than wine, beer, and cider. Moreover, despite its status as a homegrown success story, Scotch whisky bears the highest spirits duty rate among G7 nations, whilst employing 67,000 individuals across the UK.

Additionally, the industry is excluded from accessing tax breaks available to other sectors, such as the ‘Brexit Pubs Guarantee’ and small producer relief.

Read about the previous alcohol duty announcement.

Comment from the SWA

Mark Kent, Chief Executive of the SWA, commended the Spring Budget’s provisions, emphasising the benefits of extending duty freezes beyond August. 

“The industry welcomes the Chancellor’s recognition of the benefits of continuing the duty freezes beyond August this year. That decision supports the Scotch Whisky industry, will incentivise investment and, as with previous cuts and freezes, boost Treasury revenue. With cost pressures hurting our bars and pubs, not to mention hard pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.  

“Despite this freeze, Scotch Whisky is still put at a disadvantage by the duty system, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends. With today’s freeze cider is still taxed four times less than a spirit like Scotch Whisky and responsible consumers who enjoy a Scotch are paying too much tax compared with a beer or cider. Looking ahead, we will continue to work with the UK Government to ensure that our tax system is supporting the long-term success and prosperity of our iconic homegrown sectors such as Scotch Whisky, so that Scotch and other high-quality spirits are not put at a competitive disadvantage in the UK and other markets around the world.” 

What Does this Mean for Whisky Investment?

Despite the tax disadvantage for whisky businesses they continue to thrive. As, inevitably, the burden is shared with UK hospitality establishments and consumers. 

Industry leaders are able to manage their tax burden by exporting whisky around the world, with 2023 seeing a £5.6 billion global export value supporting the Scottish economy.

Investment in Scotch whisky facilities continues in Scotland with many established and growing producers encouraged by strong financial performances. 

UKV International AG is one of those companies. We have invested in Scotland, and our customers with a new storage facility outside Edinburgh

Our primary concern is to increase the value of our clients investments in whisky. Whether they are collectors of rare bottles or investors in cask whisky we seek to protect their investment in our UK-government bonded, state-of-the-art warehouse. 

Speak to our whisky experts today and discover how UKV can help with your journey.