Repayment interest for Alcohol Duty
Published 6 August 2025
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This publication is available at https://www.gov.uk/government/publications/alcohol-duty-repayment-interest/repayment-interest-for-alcohol-duty
Who is likely to be affected
This affects those who pay and claim repayments of Alcohol Duty.
General description of the measure
The measure enables HMRC to pay repayment interest to businesses in certain circumstances under parts 2 and 3 of schedule 3 to the Finance Act 2001 (FA 2001): namely, where Alcohol Duty has been paid due to an error by the Commissioners, where the Commissioners have delayed a repayment of Alcohol Duty that is due, and where, in relation to an assessment to Alcohol Duty, a person has paid, or given cash security for, the whole or any part of that duty, in respect of which a tribunal has found that the whole or any part of that duty paid or secured is not due (together, the relevant circumstances). It makes the repayment interest rate for the purposes of Alcohol Duty equivalent to the rate given effect under section 102 of Finance Act 2009 (FA 2009) for certain other taxes and duties.
Policy objective
The measure ensures alignment with standard repayment practices across HMRC. These changes aim to strengthen confidence in the tax system by providing certainty and consistency to customers.
Background to the measure
As part of the Alcohol Duty reforms, administrative processes for Alcohol Duty were aligned, and changes were made to alcohol approvals, returns and payment in February 2025. Previously each alcohol regime had developed independently meaning each alcoholic product had individual and separate administration requirements. This, along with the paper-based processes in HMRC, presented an administrative challenge to the consistent application of repayment interest. Due to this no repayment interest provisions were brought into effect for the purposes of Alcohol Duty.
Separately we will also bring into effect the late payment interest provisions under section 101 of the FA 2009 for the purposes of Alcohol Duty with an appointed day order.
Detailed proposal
Operative date
The changes to repayment interest will be introduced on 1 September 2025.
There will be no recourse to repayment interest for Alcohol Duty paid prior to 1 September 2025.
Current law
Current law relating to repayment interest for Alcohol Duty is contained in schedule 3 to the FA 2001. Schedule 3 to the FA 2001 was brought into force for Alcohol Duty via Finance Act 2001 (Commencement No.2 and Saving Provision) Order 2001 (S.I. 3300/2001).
Proposed revisions
The Alcoholic Products (Repayment Interest Rate) (Alcohol Duty) Regulations 2025 set the repayment interest rate under Parts 2 and 3 of Schedule 3 to the FA 2001 for the purposes of Alcohol Duty from 1 September 2025. The regulations make the rate equivalent to the rate given effect under section 102 of the FA 2009 for certain other taxes and duties.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at Budget 2025.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses.
Equalities impacts
This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to impact around 2500 domestic alcoholic products producers who will need to familiarise themselves with the introduction of a rate of interest for repayment interest for the purposes of Alcohol Duty. This measure will have a negligible administrative impact. One off costs will include familiarisation with the changes. There are not expected to be any ongoing administrative impacts as a result of the change.
This measure is expected overall to have no impact on businesses’ experience of dealing with HMRC as the change will, in effect, align the administrative process for, and rate of, repayment interest for the purposes of Alcohol Duty with other parts of the tax regime.
This measure is not expected to disproportionately impact civil society organisations.
Operational impact (£ million) (HMRC or other)
HMRC will make changes to IT systems to implement this change, the costs of which have already been accounted for in the main alcohol reform changes.
There may be a requirement for extra staff to support the introduction of these changes. Work is ongoing to quantify that resource.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from HMRC’s systems including data on the issuing of repayment interest alongside appeals and reviews. HMRC will monitor implementation from 1 September 2025 and use this to inform any future changes that may be necessary.
Further advice
If you have any questions about this change, email the alcohol policy team at mailbox.alcoholpolicy@hmrc.gov.uk.
Declaration
James Murray MP, Exchequer Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.