From 1st February 2025, significant changes to the UK’s alcohol duty rates have come into effect. If you’re running a hospitality business, these adjustments may affect your bottom line. Here’s a breakdown of what you need to know.
Key changes
- Non-Draught Products: Alcohol duty on non-draught products has increased by 3.6%, in line with inflation. This includes pre-packaged alcoholic beverages, bottles, and cans sold in your venue.
- Draught Products: Alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) will be cut by 1.7% in cash terms, so that an average ABV strength pint will pay 1p less in duty. This applies to beer, cider, and other draught drinks served directly from taps.
- Wine Duty: Previously, wines with an ABV between 11.5% and 14.5% benefited from a temporary duty easement. However, this easement has now ended, and wines are being taxed based on their exact ABV. As a result, some wines may see a rise in duty. For example, a wine with a 14.5% ABV could face an increase of up to 54p per bottle.
- Spirits Duty: For spirits, the duty on a 70cl bottle of 40% ABV alcohol has increased by 33p. This cost could accumulate significantly if your venue sells high volumes of spirits.
What this means for your business
- Cost implications: You might need to assess your pricing strategy to absorb or pass on these increased duties.
- Product offering: Consider promoting draught products that benefit from duty reductions to optimise your profitability.
- Consumer awareness: Communicate any changes in pricing clearly to customers, particularly if price increases are inevitable.
The impact of these duty changes will vary depending on the types of alcohol you serve and the volume of sales in each category.
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