Policy paper

Alcohol Duty uprating

Published 26 November 2025

Who is likely to be affected

Individuals and businesses involved in the manufacture, distribution, holding, sale, importation and consumption of alcoholic products. 

General description of the measure

As announced at Budget 2025, the government will uprate all alcohol duty rates in line with the Retail Price Index (RPI) at 3.66%.

It will also increase the cash discount provided to small producers to maintain the relative value of Small Producer Relief (SPR), compared to the main rates. SPR provides lower alcohol duty rates for small producers — provided those products are below 8.5% alcohol by volume (ABV), not produced under licence, and are made on small producer premises producing below 4,500 hectolitres of pure alcohol per year.

Consistent with the wider uprating, the government will also increase the simplified duty rates used for calculating excise duty on alcoholic products brought into Great Britain for personal use.

All changes will have effect on and after 1 February 2026. 

Policy objective

Alcohol duty will be uprated with RPI on 1 February 2026 to maintain its current real-terms value. This is consistent with the government’s policy, reflected in the Office for Budget Responsibility (OBR) forecast, that the duty should keep pace with overall prices.

The government heard representations from stakeholders ranging from a duty cut or freeze to above inflation increases. This decision balances the important contribution of alcohol producers and the hospitality sector to our culture and economy, with the duty’s role in reducing alcohol harm.

To support eligible small producers of alcoholic products, the government will also increase the cash discount provided to small producers, maintaining the relative value of SPR compared to the main duty rates.

Background to the measure

The decision made in relation to alcohol duty at this Budget is in line with existing government policy, as reflected in the OBR forecast.

Detailed proposal

Operative date

The new alcohol duty rates, draught rates and SPR discounts will take effect on 1 February 2026.

Current law

The main provisions relating to the production of alcoholic products and the charging, calculation and remission of alcohol duty (including any reliefs) are set out in Part 2 of the Finance (No.2) Act 2023.

The alcohol duty rates are contained in Schedule 7 (rates of Alcohol Duty), reduced rates for draught relief are contained in Schedule 8 (qualifying draught products — reduced rates) and tables used to calculate Small Producer Relief discounts are in Schedule 9 (small producer alcoholic products — duty discount). 

Proposed revisions

Schedule 7 is amended so that the revised rates are: 

• duty on all alcoholic products less than 3.5% ABV — £9.96 per litre of alcohol in the product 
• duty on still cider at least 3.5% but less than 8.5% ABV — £10.39 per litre of alcohol in the product 
• duty on sparkling cider at least 3.5% but not exceeding 5.5% ABV — £10.39 per litre of alcohol in the product 
• duty on beer at least 3.5% but less than 8.5% ABV — £22.58 per litre of alcohol in the product 
• duty on spirits, wine and other fermented products at least 3.5% but less than 8.5% ABV — £26.61 per litre of alcohol in the product 
• duty on sparkling cider exceeding 5.5% ABV but less than 8.5% ABV — £26.61 per litre of alcohol in the product 
• duty on all alcoholic products at least 8.5% but not exceeding 22% ABV — £30.62 per litre of alcohol in the product 
• duty on all alcoholic products exceeding 22% ABV — £33.99 per litre of alcohol in the product 

Schedule 8 is amended so that the revised rates for products qualifying for draught relief are: 

• the reduced rate of duty on all draught alcoholic products less than 3.5% ABV — £8.58 per litre of alcohol in the product 
• the reduced rate of duty on draught still cider at least 3.5% but less than 8.5% ABV — £8.95 per litre of alcohol in the product 
• the reduced rate of duty on draught sparkling cider at least 3.5% but not exceeding 5.5% ABV — £8.95 per litre of alcohol on product 
• the reduced rate of duty on draught beer, spirits, wine and other fermented products at least 3.5% (but less than 8.5%) — £19.45 per litre of alcohol in the product 
• the reduced rate of duty on sparkling cider exceeding 5.5% but less than 8.5% ABV — £19.45 per litre of alcohol in the product 

The marginal discount and cumulative discount figures in the tables at Schedule 9 are amended, to maintain the Small Producer Relief percentage discounts.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.

Macroeconomic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

Uprating alcohol duty will have an indirect impact on individuals who consume alcoholic products if the changes on duty rates are passed on to individuals through changes in prices for relevant products.  

The uprating ensures that the value of alcohol duty is maintained in real-terms. The OBR takes account of the impacts of uprating on underlying alcohol demand as part of the alcohol duty forecast and has published the price elasticities it uses in the forecast.

These measures are not expected to impact on family formation, stability or breakdown.   

Customer experience of engaging and interacting with HMRC is expected to remain the same, as there will be no changes in the way duty is collected. 

Equalities impacts

An individual may be affected by this measure regardless of their protected characteristics. This measure is expected to impact on individuals who consume or purchase alcohol, as it will maintain the tax level on alcoholic products in real terms. If a protected group is overrepresented in this population, then it will be disproportionately impacted. Individuals who consume more than 14 units of alcohol a week are considered to be at an increasing or higher risk of alcohol-related harm.

Men are estimated to be overrepresented in the population who consume alcohol at least once a week (56%), as well the population who consume more than 14 units of alcohol a week (66%), compared to their prevalence in the UK adult population (50%). Older individuals (aged 55 and above) are also estimated to be overrepresented in the population of individuals who consume alcohol at least once a week (45%) compared to their prevalence in the UK adult population (39%). In addition, those aged 45 – 74 are estimated to be overrepresented in the population who consume more than 14 units of alcohol a week (52%) compared to in the UK adult population (44%).

HMRC does not currently hold any recent data on the other protected characteristics of consumers of alcohol and so cannot make an assessment of the impacts on those with shared protected characteristics.

Administrative impact on business including civil society organisations

The changes in alcohol duty rates will impact on alcoholic product manufacturers, importers and retailers. The measure is expected to have a negligible administrative impact on up to 8,000 businesses that either produce alcoholic products in the UK, import alcoholic products into the UK, or are involved in warehousing alcoholic products in duty suspense. Those businesses affected by the duty rate change will incur a negligible one-off cost of familiarisation with the new duty rates. 

There are not expected to be any continuing costs. This measure is not expected to have any impact on civil society organisations. Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC. 

This measure is expected to have some impact on the hospitality industry, assuming that alcohol producers increase wholesale prices to reflect the uprating.

This measure will impact on some small and micro businesses affected by the alcohol duty uprating. However, the impact will be reduced for producers eligible for SPR and will be further mitigated by the increase in the cash discount.

Operational impact (£ million) (HMRC or other)

HMRC will need to make changes to IT systems to implement the measure. A review of the changes and respective costs are ongoing.

Other impacts

Increasing alcohol duty rates on all alcoholic products by RPI may lead to a minor decrease in overall alcohol consumption in the UK which can contribute towards tackling alcohol related harm. Any reduction in alcohol consumption from this measure may also be associated to reductions in alcohol-related economic inactivity. 

Other impacts have been considered and none have been identified.  

Monitoring and evaluation

This measure will be monitored through information collected from tax receipts.  

Further advice

If you have any questions about this change, email alcohol policy mailbox.alcoholpolicy@hmrc.gov.uk.