Budget 2021: Are pints and prosecco going to get cheaper after the alcohol duty cut?

Landlords have welcomed the tax changers but with the cost of staffing and utilities rising they may have other things to worry about, ITV News reporter Daniel Hewitt reports

  • Words by ITV News multimedia producer Connor Parker

The price of beer, cider and sparkling wine is set to fall as part of a huge overhaul of the UK's alcohol duty tax, the Chancellor announced in his budget on Wednesday.

Rishi Sunak revealed the reform as part of his spending package, which saw the Universal Credit taper rate lowered from 63% to 55%, a minimum wage rise and a raft of packages he claimed would increase public spending by 3.8% a year.

The changes to alcohol taxes come in two parts, an immediate cancellation of a scheduled rise on alcohol duty and reforms to the system as a whole which will be implemented in February 2023.

Mr Sunak said the cancellation of the planned rise alone would cost £3bn.

What is alcohol duty?

Alcohol duty is a tax on the strength of alcohol, with each type (beer, cider, wine, spirits) having its own rate.

Currently, a pint of 5% beer would have an alcohol duty of around 54p. This is paid on top of VAT.

As part of his speech Mr Sunak criticised the current system of alcohol taxes as outdated and too complicated.He pointed out sparkling wines have a 28% higher duty than still wines even though they are often similar strengths.

There is a similar situation with ciders, where any cider made with a fruit other than apples or pears pay up to three times more.

The new system will slash the number of main duty rates from 15 to six.

The price of sparkling wine is set to drop Credit: PA

Is alcohol going to get cheaper?

For cider, beer and sparkling wine, yes, but spirits are likely going to get more expensive.

The Chancellor also said some red wines and high strength "white ciders" would see their prices go up.

Some examples the government provided showed a £3.20 pint of Fosters 4% sold in a pub would cost 3p less in tax.

A bottle of Porta 6 Vinho Verde (9.5%) which cost £9 would see its tax cost fall by 37p.

A pint of Kopparberg Strawberry and Lime (4%) sold in a pub for £3.80 would see its tax fall by 13%.

Sparkling wines will see their tax drop significantly, with a bottle of £7 Prosecco seeing their tax drop by 87p.

However, stronger alcohols will see a steep increase in tax, with the 7.5% white cider Frosty Jack's which retails for £3.70 seeing a 45p rise in its tax.

The 15% Scottish fortified wine Buckfast which retails for £8.50 will see its tax rise by 81p.

Strong vodkas like Smirnoff will see no change but ports will see their tax rise sharply, with a bottle of Taylor's seeing an increase of £1.09.

This does not mean all of the price reductions or increases will be immediately passed onto the customer because retailers, pubs and bars may choose to keep the extra money or take on the extra costs.

The budget also included a 6% increase to the minimum wage which will likely increase costs in the hospitality sector.

Was there anything else for the alcohol industry in the budget?

The treasury said pubs and bars will benefit from a new "draught relief" which will cut duty on beer and cider sold on draught in pubs by the most since 1923.

A new Small Producer Relief was also announced, extending a similar tax subsidy to Small Brewers Relief across to those making cider and other alcoholic drinks of less than 8.5 ABV across the UK.

What has the industry said?

Miles Beale, chief executive of the Wine & Spirit Trade Association, said the announcement was a "huge relief" to the industry.

Emma McClarkin, chief executive of the British Beer & Pub Association, said: “Pubs, brewers and beer drinkers will be toasting the Chancellor today for a range of business-boosting measures.

“Pub goers will also be toasting the Chancellor today for announcing a 5% lower duty rate on draught beer worth £62 million."

However, Ms McClarkin also pointed out the overall beer duty rate in the UK remains amongst the highest in Europe.