Alcohol tax rates will be frozen for a further six months until August 2023, the government has confirmed.
Announcing the move in the Commons, Chancellor of the Exchequer James Cartlidge said it is hoped the extension will “provide certainty and reassurance to pubs, distilleries and breweries as they face a challenging period ahead”.
Alcohol taxes were due to rise on February 1 following the reversal of most of Kwasi Kwarteng’s disastrous mini-budget, but Cartlidge said this year the tax decision will be held until Chancellor Jeremy Hunt delivers his spring. budget on March 15, 2023.
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Mr Cartlidge made it clear that if any changes in alcohol obligation is announced in the spring budget, they will only come into force on 1 August 2023.
The alcohol tax was due to rise with inflation in the retail price index (RPI) in February. RPI inflation was 14% in November.
“Today’s announcement reflects this Government’s commitment to responsible management of the UK economy and supporting hospitality through a challenging winter,” the Chancellor of the Exchequer said.
“The alcohol sector is vital to our country’s social fabric and supports thousands of jobs – we’ve been listening to pubs, breweries and industry representatives who are concerned about their future as they prepare for the new, simpler alcohol tax system that comes into effect from August.
“That is why we have acted now to provide maximum certainty to the industry and confirmed that there will be just one set of industry-wide changes next summer.”
The British Beer and Pub Association welcomed the decision to extend the beer tax freeze.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “The decision to extend the beer tax freeze will be welcomed by pubs and brewers alike. In 2022, our industry faces pressures and challenges like never before.
“This freeze will allow £180 million to be reinvested in our sector at a critical time and inject a much-needed wave of festive cheer for pubs and breweries. It shows that the Government understands how much our pubs and brewers mean to communities across the country. Great Britain.”
But shadow minister Abena Oppong-Asare told the Commons it was “ridiculous” that the government announced a six-month extension of the alcohol tax freeze in the name of certainty.
“We should call it what it is: it’s a U-turn. The previous chancellor announced a freeze, the current chancellor scrapped it, and now it’s back. How did we get here?” she said.
Oppong-Asare also accused the government of having “no long-term plan for the British economy”.
At the autumn budget 2021, the government announced its intention to reform alcohol tax by adopting a “common sense approach” where the higher the strength of a drink, the higher the tax.
The government also said it will introduce new relief to help pubs and small producers thrive.
These reforms will enter into force from 1 August 2023.