Chancellor extends alcohol duty freeze as he unveils pre-election ‘tax-cutting’ Budget

The freeze on alcohol duty had been due to end in August. Traditionally, alcohol duty rates rise annually in line with inflation but the past decade or so have seen most Chancellors opt to freeze it. 

In extending the alcohol duty freeze, Hunt said he was “backing the Great British Pub”, pointing to a business rate discount he announced last autumn​​ that is saving a typical pub £13,000 a year.

But pub trade body the BII said the Budget had delivered little for pubs. 

“The Spring Budget statement this afternoon delivered no support for independent pub businesses in every village, town and high street across the UK,” says BII CEO Steve Alton. 

“The freeze on duty until February next year will not help pubs, who have been facing huge inflation in every area of their business, high energy costs, wage rises and reduced footfall from consumers facing their own cost of living crisis.

“Our members and the wider hospitality industry are in urgent need of meaningful investment to allow them to thrive as essential hubs of their communities, delivering vital social connection, all whilst supporting local employment and local supply chains.  This Budget simply did not deliver to safeguard incredibly successful operators, who are struggling with profitability, whilst being unfairly and disproportionately taxed.”

Complex new taxation rules on wine​

The Wine and Spirit Trade Association (WSTA) said the drinks sector was “breathing a sigh of relief at a freeze to alcohol duty” but criticised previously announced complex changes to the way wine is taxed.

“Six months ago, alcohol duty was subjected to the largest increase in almost 50 years,” says chief executive of the WSTA Miles Beale. 

“Those tax increases fuelled inflation and had a negative impact on sales, which in turn has seen Treasury lose around £600 million in alcohol revenue. We are pleased that Government has now recognised that duty hikes are bad for businesses, bad for consumers and bad for the Exchequer.”

“However, the benefits of a freeze will be short lived for wine businesses who are fuming after confirmation that costly and fiendishly complex new taxation rules will come into force from 1 February 2025. The changes to taxing wine have been described as ‘un-administrable’ and ‘sheer lunacy’ by our members. Scrapping the easement for wine duty will see price increases for 75% of red wines sold in UK.” 

To the disappointment of the wider hospitality sector, the Chancellor did not use his Spring Budget to address VAT or business rates. 

The rest of the Budget statement was largely uneventful for the hospitality sector, although some of Hunt's headline changes - including a 2% cut to National Insurance and the extension of a 5p cut to fuel duty for another 12 months - could buoy consumer confidence.