Pubs prepare for increase in packaged beer tax

Pubs and breweries are preparing for cost increases from Tuesday 1 August, as beer duty will reach the highest level it has ever been. 

From the beginning of August 2023, brewers will pay 10.1% more tax on bottles and cans of beer, meaning tax will make up around 30% of the cost of a 500ml bottle, according to the British Beer & Pub Association (BBPA).  

While duty paid on draught beer in pubs will be frozen, the tax increase on packaged beer is set to have an impact on both breweries and pubs, with the BBPA claiming it will add an extra £225m of costs per year across the industry. 

The changes, which are being introduced as part of wider reforms announced in 2021, aim to simplify the regime so that duty paid on all alcoholic drinks is relative to their strength (ABV). 

The move is part of the government’s plan to incentivise the production of lower-strength alcoholic drinks, with products qualifying for the new lower rate of duty now being anything less than 3.5%, up from 2.8% in the previous system.  

"Our duty system was long-overdue reform, to better incentivise the production of lower-strength products and nudge consumers towards them," says Emma McClarkin, chief executive of the BBPA. "This is a very welcome change for our industry which will help to generate even more variety and greater innovation in our sector, as is the freeze for draught beer to support pubs.  

"But brewers don’t just supply draught products, they package beer in bottles and cans for enjoyment in pubs and at home as well, so the 10.1% duty increase will have a huge impact, and overall will likely lead to costs going up across the whole category.  

"We need the government to guarantee there will be no further increases to duty in the coming months, because there is only so long our brewers and the pubs they supply can continue to shield customers from these rising costs, so that a pint at the local remains affordable for everyone."

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