Despite the recent craft beer boom, the cost of tax relief claimed through small brewers’ relief (SBR) has increased only 9% over the last five years, to £60 million in 2018-19, up from £55 million in 2014-15. That’s according to new figures from UHY Hacker Young, the national accountancy group.
UHY Hacker Young says despite the low cost of SBR, it has helped enable an explosive growth in new breweries opening, and job creation.
Introduced in 2002, the SBR scheme provides relief for brewers producing less than 10.6 million pints of beer a year. Tax relief is based on output, where the very smallest brewers — those with an annual production of less than 880,000 pints — receive a 50% duty discount. This discount on duty gradually reduces as beer production increases.
UHY Hacker Young adds that with a relatively low cost to the government, there is a significant opportunity to expand the scope of SBR to higher-volume new breweries. In the 2018 Budget, the Chancellor announced a review into SBR to ensure it is offering enough support for smaller brewers and to explore ways to improve it.
UK success story
Martin Jones, partner at UHY Hacker Young, said: “Craft beer’s popularity has exploded in recent years, but the cost to the government in tax relief has remained small.
“For a very low cost, small brewers’ relief has helped to stimulate one of the UK’s success stories in recent years — the growth of its craft beer industry. UK craft beer is now a major exporter. It has provided a helping hand for many independent brewers to enter the market, thereby supporting thousands of jobs.
“There remains a large amount of headroom to expand the scope of the relief. We would like to see it expanded even more to higher-volume start-up brewers, as well to ensure they have the funds need to invest and grow. It has already proved more than effective in helping the craft beer industry grow rapidly.”
Jones added: “Many well-known and recognised craft beer giants, such as BrewDog, Beavertown, and Innes & Gunn, got a leg up because of small brewers’ relief. The government consultation into small brewers’ relief should help identify ways to increase the attractiveness of the relief and the ease by which breweries are able to claim it.”
Research by UHY Hacker Young shows that in the last year 430 new breweries were opened in the UK. The industry has expanded rapidly in recent years, with craft beer sales growing at around 90% in 2018, compared to a 1.3% decrease in sales of big brand ‘classic’ lagers.