A consultation on the introduction of Small Producers’ Relief (SPR), announced in the autumn Budget, will end on 30th January. The scheme is set to replace Small Brewers’ Relief.
SPR will extend to beer, cider, wine, mead, and spirit-based drinks below 8.5% ABV. Subject to the outcome of the consultation, rates for the new SPR will take effect from 1st February, 2023.
Under the current SBR scheme, smaller brewers get up to 50%off their beer duty bills. Once they exceed more than 5,000 hectolitres (880,000 pints), a taper applies, reducing the discount.
What will change?
The government considers that the current scheme disincentivises growth, as the relief withdraws rapidly once a brewer produces more than 5,000 hectolitres per annum. In response, it intends to reduce the starting threshold from 5,000 hectolitres to 2,500 hectolitres, and replace the existing scheme with a more progressive taper, where the marginal duty paid by the brewer increases in steps as the brewer grows.
The new taper will extend from 60,000hl (11 million pints) to 100,000hl (18 million pints), to incorporate a wider range of brewers. This, the government says, will provide a fairer, more gradual transition as brewers grow, while ensuring no brewer’s duty bill increases by more than 5% as it moves to the new system.
The government is also moving to a system which taxes alcoholic drinks by the litres of pure alcohol they contain, rather than volume of the finished product. To align with this change, it intends to link SPR to the alcohol content of the beer, rather than volume of finished product.
It is also extending SPR to beers below 2.9% ABV. This will ensure higher strength beers no longer receive more relief in absolute terms, and support a move to drinking lower-strength products.
Investment
A Treasury spokesperson told Beer Today: “In making these changes, the government is investing around £15 million into the craft brewing sector to support this growing British industry.
“The changes will benefit 105 brewers, while ensuring no brewer’s duty bill increases by more than 5%.”
Brewers can respond to the alcohol duty review consultation here (download).
