Price of our favourite pub tipples set to climb by as much as £1.30​

Alcohol duty is the tax levied by HMRC on all alcoholic products such as beers, cider, wine and spirits. 

Analysis by RIFT shows that total alcohol duty paid to HMRC climbed from £7.6m in 2003/04 to £12.1m in 2020/21 - a 60% increase. At the same time, alcohol duty as a proportion of all HMRC receipts during 2020/21 sat at 2.1%, the second highest level seen in the last two decades. 

During the Autumn Budget 2020 and the height of the pandemic, the Government decided to freeze the rate of alcohol duty to hand the hospitality sector a lifeline, with a six month extension granted in December of last year and applicable from 1 February to 1 August 2023.

Following the freeze implemented in the 2020 Autumn Budget, total alcohol duty paid as a proportion of all HMRC receipts fell to 1.8% in 2021/22, the lowest annual proportions seen in the last 20 years. It then fell further, with alcohol duty accounting for just 1.6% of all HMRC receipts last year (2022/23).

As of today, 1st August, the freeze in alcohol duty will come to an end, meaning that the duty owed on many of our favourite beverages from the boozer will climb, further reducing the profit margin of the nation’s pubs who are likely to have little choice but to pass this price hike onto the consumer. 

Fortified wines such as port (+£1.30) and sherry (+98p) are set to see the largest increase, climbing by 44% per bottle. A bottle of vodka is set to increase by 77 pence per bottle, while a bottle of wine is due to increase by 44 pence. 

Bottles of beer (+3p) and cider (+2p) are also due to increase in cost but there is some good news for the nation’s pint lovers. 

While the freeze on alcohol duty is set to end, pubs will see an increase in the value of Draught Relief from 5% to 9.2%, which will reduce the tax burden on draught beers and ciders under 8.5% ABV and in containers of at least 20 litres

However, further research by RIFT shows that while this means the duty owed on a pint will remain static, pubs are already being squeezed at the pump, taking just 45% of the price charged on a pint.

RIFT has broken down the price of a pint to highlight that even with the freeze on alcohol duty and Draught Relief, pints are far from profitable. 

The breakdown shows that the average cost of a pint is currently £4.57. Before it even reaches the pump, £1.11 of this goes towards the brewery (79p) and the distributors (32p). A further 91 pence is paid in VAT, with 49 pence paid in alcohol duty. 

In total, £2.51 is paid from a pint before the pub takes its remaining £2.06 share. However, this £2.06 isn’t pure profit, it also has to cover costs such as the rent on the premises, running costs such as energy bills and staff wages. 

Previous research by RIFT found that some parts of Britain have seen as many as 69 local pubs close their doors in the past two years.

With the nation’s pubs already struggling to make ends meet due to high energy prices, the cost of living crisis, and dented consumer confidence as a result of the current economic landscape, there are fears that the increased cost of alcohol duty could cause more to shut their doors.