Tag: tax cut

CHEERS! Tax cut for 38,000 British pubs

  • Tax paid on pints and other drinks on tap in over 38,000 UK pubs is now up to 11p cheaper than their supermarket equivalents
  • The new Brexit Pubs Guarantee will keep it this way for good
  • Alcohol duty now simplified so drinks are taxed by strength, lowering duty on supermarket shelves for many UK favourites including bottles of pale ale, pre-mixed gin and tonic, and prosecco

Over 38,000 UK pubs and bars have seen a tax cut on the pints they pull from today as the government’s alcohol duty changes take effect.

The duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket. The changes are designed to help pubs compete on a level playing field with supermarkets, so they can continue to thrive at the heart of communities across the UK. The Brexit Pubs Guarantee announced in the Chancellor’s Spring Budget secures the pledge that pubs will always pay less alcohol duty than supermarkets going forwards.

It comes as other landmark changes to the alcohol duty system also come into effect today, which see drinks taxed by strength for the first time and a new relief – named Small Producer Relief – to help small businesses and start-ups create new drinks, innovate and grow.

Today’s changes have automatically lowered the duty in shops and supermarkets on many of the UK’s favourites including certain bottles of pale ale, pre-mixed gin and tonic, hard seltzer, Irish cream, coffee liquor and English sparkling wine, amongst others.

Prime Minister Rishi Sunak said: “I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.

“Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.

“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.”

Jeremy Hunt, Chancellor of the Exchequer, said: “British pubs are the beating heart of our communities and as they face rising costs, we’re doing all we can to help them out. Through our Brexit Pubs Guarantee, we’re protecting the price of a pint.

“The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially.”

The three alcohol duty changes that have taken effect today are only possible thanks to the UK’s departure from the EU and the guarantees set out in the Windsor Framework.

The previous duty system was complex and unfair but now that the UK is free to set excise policy to suit its needs, the government has brought about common-sense reforms in order to support wider UK tax and public health objectives.

Brexit Pubs Guarantee

Over 38,000 UK pubs will benefit from lower alcohol tax on the drinks they pour from tap from today. This is because the government has expanded Draught Relief, which effectively freezes or cuts the alcohol duty on the vast majority of these drinks. This is to protect pubs, who are often undercut by supermarket competitors.

It means that the duty they pay on each drink poured from draught, such as pints of beer and cider, will be up to 11p cheaper than in supermarkets. The government has pledged that the duty pubs and bars pay on these drinks will always be less than retailers, known as the Brexit Pubs Guarantee.

This tax reduction is part of a wider shake up of the alcohol duty system which also comes into effect from today – the biggest in 140 years.

A simpler, more modern alcohol duty system

The alcohol duty reforms were announced at the Autumn Budget in 2021. The reforms pledged to modernise and simplify a duty system that had not been changed in 140 years, only possible as the UK has left the EU.

The key changes are:

  • All products taxed in line with alcohol by volume (ABV) strength, rather than different duty structures for different drinks
  • Fewer main duty rates, from 15 to 6, to make it easier for businesses to grow and operate
  • There will be lower taxes on lower alcohol products – those below 3.5% alcohol by volume (ABV) in strength – a huge growth area in the drinks industry
  • All drinks above 8.5% ABV will pay the same rate regardless of product type
    This will mean that many UK favourites will see duty reductions. Irish cream will drop by 3p, cans of 5% ABV ready-to-drink spirit mixers by 6p, Prosecco by 61p and 500ml 3.4% pale ale by 20p a bottle.

New tax relief to encourage small producers to make new drinks

The UK alcoholic drinks market reached just under £50 billion in 2022, up 6% year on year and is expected to continue to grow – sales are forecast to reach £60.9 billion in 2026. The UK government is laser-focused on continuing this burgeoning success.

The government is introducing Small Producer Relief effective from today, which replaces and extends the previous Small Brewers Relief scheme.

This allows small businesses who produce alcoholic products with an ABV of less than 8.5% to be eligible for reduced rates of alcohol duty on qualifying products.

The new tax relief scheme promotes innovation in the drinks sector, giving small producers the financial freedom to experiment with new types of drink and grow their business. It also supports the modern drinking trend of lower alcohol beverages.

Tax cut worth up to £1,000 for half a million small businesses starts today

  • Tax cut worth up to £1,000 for eligible businesses announced by the Chancellor at the Spring Statement takes effect today
  • Increase in Employment Allowance from £4,000 to £5,000 benefits around 495,000 businesses – 30% of all UK firms
  • Takes the total number of firms not paying the Health and Social Care Levy to 670,000

Nearly half a million UK businesses will benefit from a tax cut worth up to £1,000 from today (6 April 2022).

The Employment Allowance has risen from £4,000 to £5,000 – meaning smaller firms will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs) bills.

Announced by the Chancellor at last month’s Spring Statement to reduce employment costs, the change takes an extra 50,000 firms out of paying NICs and the Health and Social Care Levy. This increases the total number of businesses not paying NICs and the Levy to 670,000.

Chancellor Rishi Sunak said: “This tax cut for half a million businesses will help them thrive and grow to help drive our economic recovery.

“It comes on top of a suite of wider tax cuts available to firms, including 50% business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.”

This is the third time the government has increased the Employment Allowance since its introduction in 2014, demonstrating an enduring commitment to supporting smaller businesses. Firms will be able to employ four full-time workers on the National Living Wage without paying employer NICs at all.

94% of businesses benefitting from the £1,000 increase are small and micro businesses, and the sectors that will see the highest numbers of employers benefitting are the wholesale and retail sector (87,000); the professional, scientific and technical activities industry (63,000); and the construction sector (52,000).

Today’s Employment Allowance change is one of a number of measures on offer to spur business growth, including that:

  • Last week eligible high street businesses saw the start of a new 50% business rates relief worth almost £1.7 billion, subject to a £110,000 cash cap per business.
  • Businesses across the board are also benefitting from a freeze to the business rates multiplier, putting the brakes on bill increases and worth £4.6 billion over the next five years.
  • Businesses are already benefitting from our temporary twelve-month-long 5p cut to fuel duty.
  • Companies have one year left to make investments that benefit from the super-deduction, the largest two-year business tax cut in modern British history.
  • Our landmark Help to Grow programmes are supporting SMEs to adopt productivity enhancing software and to get mini-MBAs.
  • We will ensure that our tax regime for innovation is globally competitive and properly incentivises higher business investment in R&D, with further plans to be set out in the Autumn.

Michelle Ovens CBE, founder, Small Business Britain, said: “The Chancellor’s move to increase the employment allowance is welcome, and will certainty play a role in helping those businesses with employees deal with the huge cost-of-living challenges they are currently facing.

“In particular, it is good to see the immediacy of this rise in employment allowance, which will go towards helping businesses asap.”

Martin McTague, National Chair of the Federation of Small Businesses, said: ““The increase in the Employment Allowance helps small firms do what they do best, creating and sustaining jobs.

“This was FSB’s ‘hero ask’ at the Spring Statement, and we have hugely valued the time taken by Treasury officials to work with us on the positive impact this will have not just on work opportunities, but also training and investment.

“The Chancellor has now raised the Allowance twice since his appointment, stepping up for small businesses.”

Lee Harris-Hamer, from White Horse cleaning services based in Thirsk, North Yorkshire, said: “As a growing company, we appreciate the opportunity to reduce our annual NI liability because this helps us to invest the savings in other areas like staff training and further growth.

“Staff are our key asset and we want to be able to continue recruiting and offering more employment opportunities locally. Government has supported us with the change and we are proud to be members of FSB who championed the increase.”

Jo Bevilacqua, owner of Serenity Loves hair and beauty salon, Peterborough: “This rise in the employment allowance offers welcome breathing space for my small business and others like us across the country.

“In an age where we are all facing increasing costs from all angles and every penny counts, this will help ease some pressure, allowing us to invest more in staff – whether it is increasing salaries or offering training.”