Skip to content
Search

Latest Stories

Pubs face fresh blow as Rachel Reeves plots £400 million alcohol tax rise

Chancellor Rachel Reeves set to increase tax on pints, spirits and wine by inflation-busting 3.66 per cent from February

pubs facing tax increase

The increase has sparked particular controversy as it's calculated using the RPI, an outdated measure of inflation

Getty Images

Highlights

  • Alcohol duty to rise by 3.66 per cent in February, adding roughly 2 pence to price of a pint.
  • Increase based on discredited RPI measure, making it 50 per cent higher than if CPI used.
  • Comes amid business rates hike and rising employment costs, threatening pub closures.

British pubs face a fresh financial blow next month as chancellor Rachel Reeves introduces a £400 m annual alcohol duty raid, increasing taxes on pints, spirits and wine by 3.66 per cent from February.

The inflation-busting rise will add approximately 2 pence to the cost of a pint in pubs, though industry leaders warn this seemingly small increase could prove devastating when combined with other mounting costs.


Allen Simpson, chief executive of UKHospitality, warned, "This will be the last straw for some pubs."

The increase has sparked particular controversy as it's calculated using the retail price index (RPI), an outdated measure of inflation the Government itself acknowledges has "flaws" and hasn't been an official statistic for over a decade.

Using the consumer price index (CPI), the official inflation measure, would result in an increase 50 per cent smaller.

Mounting pressures on publicans

The alcohol duty rise compounds existing challenges facing the hospitality sector.

Pubs are already struggling with increased employers' National Insurance contributions, successive minimum wage increases, and a looming business rates hike in April that could double bills in some cases.

Emma McClarkin, chief executive of the British Beer and Pub Association, told The Telegraph "Pubs are already grappling with huge rates and taxes, and they just don't have room to absorb fresh costs. Fresh rises could lead to the price of a pint going up."

Clive Watson, chairman of Inda Pubs, described the situation as "throttling" the industry, noted "Staff should be seen as an important part of the business, but because of employment taxes and above-inflation rises on living wage, operators are constantly looking at trying to reduce hours."

The Office for Budget Responsibility forecasts alcohol duty will generate £12.3 bn in the coming financial year. British drinkers already pay around 54 pence duty per pint, the third-highest rate in Europe behind Finland and Ireland.

A Treasury spokesman defended the changes, stating they "balance the important contribution of producers, pubs and hospitality with funding vital public services" while highlighting a £4.3 bn business rates support package.

More For You

Johnnie Walker

The company is struggling with the impact of Donald Trump's tariffs

iStock

Diageo considers selling Chinese assets as new boss streamlines portfolio

Highlights

  • World's largest spirits maker reportedly reviewing Chinese operations including 63 per cent stake in Shanghai-listed Sichuan Swellfun.
  • New CEO Dave Lewis, known as "Drastic Dave ", for cost-cutting, took over on January (1) following portfolio streamlining moves.
  • Company flagged double-digit sales decline in China in November while struggling with Trump tariffs and changing consumer habits.

Diageo is reportedly considering selling its Chinese assets as new chief executive Dave Lewis moves swiftly to trim the spirits giant's portfolio amid falling sales in the world's second-largest economy.

The maker of Guinness, Johnnie Walker, Smirnoff vodka and Captain Morgan rum is working with Goldman Sachs and UBS to review its operations in China, according to Bloomberg News.

Keep ReadingShow less