DRINKERS will pay more after the government announced a hike to alcohol duty, but the price of beer will be cut.
Chancellor Rachel Reeves confirmed the move in her Autumn Statement today.
Rachel Reeves announced the move today in the Autumn Statement[/caption]
The levy was last hiked by 10.1% back in 2023 and has been frozen by the last government at that level.
It had been reported that the Chancellor was considering increasing the duty.
Ms Reeves had refused to rule out pushing up the tax on spirits, beer and wine, which will raise an extra £800million next year.
Alcohol duty typically goes up in line with inflation each year, but last year it was frozen until February 2025.
It means producers will have to hike the price of beer, wine and spirits to offset raised levies.
Alcohol duty is charged on all drinks which are more than 1.2% ABV strength, either at the point of production or when they are imported.
Usually, alcohol duty rises each year in line with inflation unless the Chancellor chooses to freeze it.
Higher taxes mean higher prices as companies pass on the rise to punters, which could deter them.
It comes after gin and whisky makers had called on the Chancellor to reduce the duty.
Firms said the last Government’s 10.1% duty increase “spectacularly backfired” with a £300million drop in tax receipts.
They submitted a dossier to the Treasury on how the hike slammed the brakes on the spirit sector leading to spiralling “ginflation”.
The UK Spirits Alliance then launched a campaign calling on Ms Reeves to raise revenue by backing spirits in the Budget.
Liam Hirt from Circumstance Distillery said the decision to increase spirit duty had a “disastrous effect”.
He added: “This tax rise resulted in alcohol’s largest-ever contribution to inflation in 17 years, increasing costs for British producers and punishing a once-thriving sector.”
Official figures show the last time alcohol duties were put up tax takings plummeted by £1.3billion as Britons baulked at the higher prices.
WATCH RACHEL REEVES ON NEVER MIND THE BALLOTS
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves will be grilled in a special Budget edition of The Sun’s Never Mind The Ballots show today.
Our Political Editor Harry Cole will put the Chancellor on the spot shortly after she’s finished delivering her crucial address in the House of Commons.
It will be available to watch on thesun.co.uk, YouTube and Sun social channels at 5.30pm.
Topics will include her decision on whether to spare motorists a fuel duty rise, and the expected eye-watering tax rises she will impose.
Since its launch earlier this year, NMTB has cemented its place at the heart of British politics.
During the General Election campaign The Sun was the only print publisher to host back-to-back grillings of Rishi Sunak and Sir Keir Starmer.
Footage from The Election Showdown has been viewed over 15 million times.
NMTB has also featured interviews with ex-PMs Boris Johnson and Liz Truss, as well as senior politicians Nigel Farage, James Cleverly, Wes Streeting, Steve Reed and Bridget Phillipson
Hospitality bosses and producers have warned another increase would have a similar effect, turning more drinkers away from pubs and restaurants.
Earlier this month, a poll revealed more than 9,000 British pubs are at risk of going bust within a year.
The survey found one in five boozers believes it is unlikely to survive the next 12 months unless the Chancellor reverses last year’s tax hike.
Fears have been circling over the past few weeks that the Government was considering more “sin taxes” on unhealthy products, including fast food, sugary treats, tobacco and vapes.
The Chancellor had repeatedly warned that she would have to make “difficult decisions” on tax.
BRITAIN’S MOST MEMORABLE BUDGETS
Today is the first Labour budget for 14 years – and the first ever to be delivered by a female Chancellor.
Brits are bracing for a raft of tax hikes as Rachel Reeves tries to plug the “£22billion black hole” she says she’s found in government accounts.
Here are five other budgets which have caused a stir over the years.
1979 – Geoffrey Howe, Conservative
Margaret Thatcher’s Chancellor Geoffrey Howe slashed both the top rate of income tax and the standard rate.
He also doubled VAT – shifting the tax burden from income to consumption in a huge change for Brits.
Howe also eased controls on foreign exchange in a bid to control inflation.
The budget signalled a massive break from the last Labour government and set the pattern for decades to come.
1988 – Nigel Lawson, Conservative
Nigel Lawson (dad to domestic goddess Nigella) massively slashed income tax again.
The deputy Commons speaker twice cleared the chamber amid noisy protests from Labour MPs slamming the tax cuts.
Lawson also set off a property bonanza by announcing an end to double mortgage tax relief for couples buying homes.
1993 – Norman Lamont, Conservative
In March 1993 the economy was still reeling from Black Wednesday, when the pound crashed out of the European exchange rate mechanism.
Lamont announced tax rises including VAT on domestic gas and electricity.
Later that year Lamont’s successor Ken Clarke froze personal tax allowance and brought in stealth taxes on insurance and plane passengers.
The Lamont and Clarke budgets marked the end of the Tories’s scything tax cuts – and set the stage for Labour’s return to office in 1997.
2002 – Gordon Brown, Labour
Brown raised national insurance by a penny on the pound to fund higher spending on the NHS.
The future PM had fretted over a possible backlash from voters who had re-elected Labour in 2001.
But he managed to pull off the largest rise in health spending in the history of the NHS.
2009 – Alistair Darling, Labour
Labour’s last budget before today came amid the credit crunch and soaring unemployment.
Darling ramped up taxes and borrowing in a bid to fill up draining Treasury coffers.
Tory leader David Cameron blasted Labour’s ‘utter mess’ – and was in power a year later.
2022 – Kwasi Kwarteng, Conservative
Kwarteng unveiled his economic package less than a month after becoming Liz Truss’s Chancellor.
Technically, it was a fiscal statement rather than a budget – but it turned out to be just as seismic.
Rising Tory star Kwarteng announced £45billion in tax cuts including a drop in all rates of income tax.
Markets took frights and the pound went into freefall before the Bank of England waded in to stop a run on UK pension funds.
Mortgage rates soared and Kwarteng was out of the job just three weeks later.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
