A gin producer and beverage manufacturer has voiced concerns that the Chancellor of the Exchequer may introduce further tax increases on spirits in the upcoming Budget.
Excise duty on spirits saw an increase of over 10% under the previous Conservative government in August 2023, followed by an additional 3.65% rise implemented by the Labour party in 2024.
Mick Skerratt of Exeter Gin fears that another duty hike would pose a significant challenge, especially as production costs are already on the rise.
HM Treasury has stated that the majority of UK-produced spirits are exported and, therefore, not subject to UK alcohol duty.
Mr. Skerratt commented, “It would place immense pressure on our business and our customers alike.”
“Margins can only be stretched so far before profitability is adversely affected.”
The gin producer suggested that the spirits industry is being “used as a bit of a cash cow for the government.”
He added, “We’re in a cost of living crisis, and there’s a limit to what people are willing and able to pay. It doesn’t benefit anyone – not the consumer and not us as a small business.”
The All-Party Parliamentary Group (APPG) on UK Spirits, established to champion the industry, noted that the number of distilleries in the UK has tripled in the last seven years, growing from 350 to 1,050, which it hails as “a modern British success story.”
The APPG estimates that excise duty accounts for approximately 70% of the retail price of an average bottle of spirits sold in the UK.
Carolyn Harris MP, Labour and chairwoman of the group, has called for a complete freeze on excise duty in Wednesday’s Budget and for the remainder of this Parliament.
She stated: “By not freezing duty, we’re putting all distillers in a precarious position, threatening their businesses and potentially creating unemployment, which would be detrimental to the economy.”
“Freezing the duty makes sense, allowing the industry to move forward from its current challenges and begin to thrive and survive.”
Duty on beer has been either frozen or reduced at every Budget for the past 12 years, and the APPG considers the disparity in taxation changes between beer and spirits to be unfair.
Brewery owner Alan Collyer believes that any alterations to beer duty have minimal impact compared to the broader challenges faced by small businesses.
Mr. Collyer, proprietor of Exeter Brewery, said: “These small adjustments don’t make a significant enough difference to entice people back to pubs.”
“The contrast between affordable alcohol in supermarkets and the increasing cost of a pint in a pub is stark, and substantial change would be needed to make people consider returning to the pub.”
A spokesperson for HM Treasury affirmed that “our distilleries are vital to Britain’s economy.”
“We’re facilitating their success through measures like waiving export duty, lowering licensing fees, reducing tariffs, and capping corporation tax,” they stated.
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