The view from Westminster

Finally we’re starting to get the details of the long awaited ‘Big Bang’ changes to the alcohol duty system – all of which are being introduced in only a few months’ time on 1 August 2023. Brewers will remember that this started with a review of SBR in 2018 and has resulted in every part of the duty system changing for small breweries. Since the review started in 2018 we’ve gone through eight Exchequer Secretaries with the ninth being appointed only a few weeks ago. We’ve also on our sixth Chancellor and fourth Prime Minister!

Now is the time to start preparing for these changes. You can rewatch our webinar on the Toolbox, along with a guide and calculator to work out your new duty levels. You’ll need to recalculate this ahead of August using the new small brewery year which runs from 1 February 2022 to 31 January 2023. You’ll also have to convert your production into hectolitres of pure alcohol (HLPA) which takes account of how strong it is and not just how much you produce. And you’ll have to do this every year (on the 1 February) as its very likely your duty rate will be different.

Remember that Small Breweries’ Relief is becoming part of a wider Small Producer Relief, which includes other products such as cider and RTDs and only applies to drinks below 8.5% ABV. Anything above that, such as your imperial stouts, will pay the full duty. Relief is no longer a percentage but in cash terms and the amount of relief you get will vary depending on its strength and how many HLPA you produce. The Government is also expanding the ‘Farmgate exemption’ to beer. Currently cider producers producing below 70hl don’t have to pay any duty at all. This will be applied to breweries producing below 5 HLPA with a full 100% discount on beer below 3.5% and a 90% reduction from 3.5-8.4%.

In addition there’s the new draught duty relief, which gives a duty discount on the beer you package into large containers of 20 litres or above. In the Budget, and on the back of SIBA’s Make It 20% campaign, the Chancellor increased this differential from 5% to 9.2%. However, with the headline duty rate going up by 10%, this translates into a freeze for beer sold in pubs. Remember that small breweries will receive Small Producer Relief on draught products as well.

There is one significant issue with the draught duty that breweries should be aware of and that is its impact on takeaway beer. A quirk to the system means that there are new restrictions on repackaging beer from draught duty containers into crowlers, growlers and other takeaway cartons. For a pub to do takeaway beer it will have to buy from the brewery non-draught duty relief containers (i.e. those that have paid the fully duty rate and not the reduced draught rate). Failure to do so could result in fines and the bar equipment being forfeited.

There’s also been significant news on the Scottish Deposit Return Scheme (DRS). SIBA has been lobbying on this issue for some time and six months ago we outlined a series of measures that we believed the Minister could introduce to assist small breweries prepare for the scheme. I’m pleased to say that they have listened and now put in place all of the mitigations that SIBA proposed. The scheme has now been delayed until 1 March 2024 with registration closing 12 January 2024. The Government has also announced that products that sell fewer than 5,000 units per year will be exempt from the scheme – especially helping those who do a few sales in Scotland from their webshops. In addition they’ve removed some of the charges – the so call Day One charges – and introduced 60 day payment terms. We’re still expecting separate schemes in England, Wales and Northern Ireland which are expected to go live in October 2025. copy is sent to all members in January.

There was also good news on the alcohol promotion and sponsorship consultation in Scotland which could have resulted in perverse outcomes such as a ban on brewery branded t-shirts and delivery vans. The Scottish Government has agreed to revisit the issue meaning its likely we’ll get a new version of the consultation soon.

Finally – don’t forget that a great way to speak to your MP is by having your beer served in Parliament. Having your cask ale chosen as a guest beer in the Strangers’ Bar is a great opportunity to come down to Parliament, have some photos taken to send to the local press and lobby your local MP for changes. Please contact me if you’re interested in this.

Barry Watts is Head of Public Affairs and Policy at SIBA. He covers political relations and policy for SIBA members. He can be contacted at barry.watts@siba.co.uk or 07977837804.

If you are interested in an enhanced listing or advertising in the email Claire@wearema.co.uk