Budget 2018: Duty frozen on beer, cider and spirits; business rates cut

Laura Foster

Laura Foster

29 October 2018

It's the news that will have the on-trade and drinks companies celebrating. Chancellor Philip Hammond has announced that the government has abandoned its plans for a tax rise in line with inflation across all drinks categories, except for wine.

The duty freeze across beer, cider and spirits means that the planned 3.4% price rise is no more. The rise for wine is still coming into effect, however, which will add 7p to an average bottle of still wine.

The price freezes mean that drinkers will be spared a rise of between 1p and 2p for a pint of cider or beer, and 26p on a bottle of spirits.

Business rates cut

Hammond also acknowledged that businesses are struggling with crippling business rates, and has announced that the Treasury will be cutting these rates by a third for businesses with a rateable value of less than £51,000. This reduction will come into effect from April 2019 for two years, and Hammond claimed that it would represent an average annual saving of £8,000 for independent businesses.

This will no doubt have quite a few proprietors across the industry breathing a sigh of relief.

The drinks industry lobbied the government on a raft of issues in the lead up to the Budget, with the WSTA claiming that many struggling pubs would close if changes weren't made to the crippling rates and duty.

The trade reacts

'We welcome the Chancellor’s decision to freeze spirit duty, which will help this great British sector to invest and grow. However, the decision to increase wine rates is a hammer blow to the wine trade. It is grossly unfair, unjustified and counterproductive.' Miles Beale, chief executive, Wine & Spirits Trade Association

'We are delighted to have a Chancellor who wants to help drinkers of Scotch, gin, and our hard-pressed pubs. Philip Hammond has listened to the industry and his Scottish colleagues, and today has acted to support our world-beating spirits industry. We thank those within the party of government who have made the case for Scotland and stood up for the 50,000 jobs this industry supports.' Charles Ireland, general manager for Diageo Great Britain, Ireland and France

'Cutting bills for smaller businesses by a third will provide some much-needed support and is a positive move by the Government. This, along with the introduction of a new tax on digital businesses, to ensure they pay their fair share, needs to be a springboard for further businesses rates reform.

‘The funds raised by this new tax should be used to ease the unfair tax burdens being shouldered by hospitality businesses to help stop the continued devastation of high streets. If the government is serious about updating the rates system then we still need to see a thorough, root and branch reform of the whole system to ensure it is fair and fit for purpose in the 21st Century.’ Kate Nicholl, chief executive, UKHospitality

'We are delighted to hear that business rates have been cut by one third for many of our members running businesses with a rateable value of under £51k. This will provide much needed help to the most vulnerable pubs in our communities. In the longer term, root-and-branch business rate reform will be required to tackle the disparity between high street businesses and online retailers.

'The freeze on duty for beer, cider and spirits was unexpected, but very welcome, and will provide a much needed boost to our industry.' Mike Clist, CEO, BII

‘Once again, the Chancellor’s announcement of a freeze in beer tax is fantastic news. It will be warmly welcomed by brewers, their employees and the thousands of hard-working publicans across the UK. And of course, it’s brilliant news for all of us who enjoy a beer in its many wonderful varieties.’ Bruce Ray, corporate affairs director, Carlsberg UK

‘A decision to freeze Beer Duty is welcome, and will no doubt go some way to keeping the British pub-going tradition affordable. However, the decision to implement the business rates relief for some and not all pubs is not enough to help protect pubs from extinction - we need wholesale reform of the business rates system to tackle the grossly unfair burden placed on pubs.

‘There must be long-term change to business rates, Beer Duty and the Pubs Code to secure the future of our treasured locals, and we're looking forward to encouraging MPs to take further action at our Mass Lobby Day tomorrow.’ Jackie Parker, national chairman, CAMRA

--Keep an eye out for further updates as more reactions come in--

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