Alcohol Duty Tax Freeze Announced by UK Government Until August 2024

In a surprising turn of events, Chancellor Jeremy Hunt has chosen to postpone any increase in alcohol taxes until August 2023, a decision that has received a warm welcome from the whisky industry in Scotland. This announcement was part of the 2023 Autumn Statement, where the Chancellor confirmed a freeze on duty across all four alcohol categories.

The Chancellor stated, “As well as confirming our Brexit Pubs Guarantee, I have decided to freeze all alcohol duty until 1 August next year. That means no increase in duty on beer, cider, wine, or spirits.”

bar selling alcohol

Financial Implications and Projections

According to Treasury documents, the decision to freeze alcohol duty will cost £90 million in 2023/24 and £220 million in 2024/25. However, the Office for Budget Responsibility (OBR) projects that the 10.1% alcohol duty hike in August this year will contribute to alcohol duty receipts reaching a total of £13 billion this year, up by £0.6 billion from the previous year. The OBR anticipates this figure to rise to £17.1 billion in 2028-29.

Reaction from the Whisky Industry

Scotch Whisky Association

While the Scotch Whisky Association (SWA) welcomed the duty freeze, it emphasised the tax burden on spirits. With a duty rate of £31.64 per litre of pure alcohol, out of the £15.63 average price of a bottle of Scotch Whisky, £11.40 is collected in taxation through duty and VAT, resulting in a tax burden of 73%.

Mark Kent, Chief Executive of the SWA, made this comment: “The industry is raising a dram to the Chancellor’s decision to support Scotch Whisky producers by returning to the duty freezes that have supported the industry, incentivised investment, and boosted Treasury revenue.”

“With cost pressures hurting distillers large and small, the Treasury has provided some much-needed certainty and stability for the year ahead that will allow us to get back to doing what we do best – making a world-class spirit, with a global reputation, which creates jobs and boosts growth here at home.”

“Under the current duty system, Scotch whisky is still put at a disadvantage, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends. We want to continue the discussion with the government about how the tax system can more closely reflect the number of units in a typical drink, rather than the strength of the finished product. Despite today’s duty freeze, cider is still taxed four times less than a spirit like Scotch Whisky – this is not fair and cannot be justified.”

Diageo

Nuno Teles, Managing Director at Diageo GB said: “Today we raise a glass to the Chancellor and the Prime Minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.”

“Drinkers and pub-goers across the country now have even more reason to celebrate this festive season.”

What Does Alcohol Duty Freeze Mean for Investors?

The Alcohol Duty freeze is will not directly impact investors or collectors of whisky, unless they are purchasing whisky directly off the shelf. However, it does allow distillers to invest in developing new and innovative whiskies. 

We have seen continued investment in the whisky industry from distilleries big, and small. Not only that, but we have recently seen The Macallan 1926 Adami sell for £2.2 million at auction. Other signs of investment in the whisky industry include:

So, although the alcohol duty freeze may not affect enthusiasts expanding their collection directly, it could allow the whisky industry to invest in better facilities and production.

UKV International AG assists clients with developing their passion for whisky. Whether that is through adding to their whisky collection, discovering new whiskies, or investing in cask whisky. 

Speak to our team of whisky experts today and develop your whisky journey.