Budget 2021: Chancellor delivers a positive Budget for the beer and pubs sector, but some questions remain for small independent brewers
Responding to the Chancellors 2021 Budget, James Calder, SIBA Chief Executive said;
“The Chancellor’s Budget introduced radical changes to the outdated Alcohol Duty system which will benefit brewers of lower strength beers, traditional cask beer and create a more level playing field between small breweries and cider producers.
The lower rate of duty for beer sold in pubs is a huge win for the industry and something which SIBA has been campaigning for. We look forward to working with the Treasury as they implement this landmark policy. Whilst hugely beneficial for producers of Real Ale, which is sold in forty litre casks, most craft keg beer in the UK is sold in thirty litre kegs, meaning they cannot benefit. By amending this lower threshold to twenty litres the Treasury can ensure all independent breweries benefit from this welcome new duty relief on draught beer.
Furthermore the Freeze in Beer duty, taking effect from tonight, is very helpful at a time when brewers are seeing a myriad of other supply and running costs rising, and the Business Rates Relief for pubs will be welcomed by many in a struggling sector.
The new Small Producer Relief scheme builds on the hugely successful Small Breweries Relief scheme (SBR) and we will continue to work constructively with The Treasury to implement positive reform of SBR that does not see small independent breweries worse off.
Cutting business rates bills for hospitality premises by 50% for the next year is also hugely beneficial and SIBA would like to see the definition of those premises expanded to cover all breweries, taprooms, bars and pubs.”
Beer & Brewing Budget Summary
Duty Freeze
In his Budget the Chancellor announced a freeze in the headline rate of duty for beer, cider, wine and spirits, a saving of £3 billion over the next five years.
Alcohol Duty Reform
The Chancellor announced a radical simplification of the duty system, reducing the main rates from 15 to 6 and taxing all products in proportion to their alcohol content. Following consultation, this will take effect from February 2023. All alcohol will move to a standardised set of bands with the rates of:
1.2%-3.4% ABV
3.5%-8.4% ABV
8.5%-22% ABV
Above 22% ABV
The ‘lower strength band’ will therefore go from 2.8% to 3.5%. Those above 8.5% will pay the same rate of duty if they have the same proportion of alcohol content.
A consultation has been launched on this which can be found here – https://www.gov.uk/government/consultations/the-new-alcohol-duty-system-consultation
Small Brewers Relief
No announcement has made on the changes to Small Breweries’ Relief (SBR) in the Budget. The Treasury has confirmed to SIBA that they are planning to announce this by the end of the year.
Small Producers Relief
In addition to the Alcohol Duty Review, the Chancellor announced a Small Producers Relief for cider, wine and spirits based products below 8.5% ABV. The Treasury has confirmed to SIBA that SBR will remain a separate scheme but the new scheme will mirror SBR in a number of ways. They have also said that the farmgate exemption will remain below 70hl for cider. The timing for its introduction is uncertain.
Lower Rate of Duty for Draught Beer and cider
A new lower rate for draught beer and cider, with a reduction of 5% will be introduced, subject to a consultation. This will only currently apply to 40 litre containers, below 8.5% ABV and sold as to connect to a dispense system. SIBA pushed, and will continue to push that this be applicable to containers of over 20L – to apply to pins and craft keg. Following consultation, Government plan for this to apply from February 2023.
Fundamental reform of Business Rates
The Chancellor announced its final report on the reform of Business Rates to make the system fairer and more supportive. In addition he announced a new 50% 1 year temporary relief for retail, hospitality and leisure properties.
As we have through Covid, SIBA will push Government to ensure that the definition of who will be eligible will apply as widely as possible covering breweries, taprooms and your pubs.
