Policy paper

Alcohol Duty uprating and Small Producer Relief changes

Published 28 October 2026

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 2026, the Government will uprate all Alcohol Duty rates in line with the Retail Price Index (RPI) at (4.55%).

It will also increase the relative value of Small Producer Relief (SPR) compared to the main rates, by moving to a more generous discount taper for products under 3.5% ABV and uprating the marginal discount for products between 3.5% and 8.4% ABV by RPI plus an additional 10%. 

SPR provides lower Alcohol Duty rates for small and some medium-sized producers – provided those products are below 8.5% 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. 

Policy objective 

Alcohol Duty will be uprated in line with RPI (4.55%) on 1 February 2027 to maintain its current real-terms value. This is consistent with the Government’s policy, as reflected in the Office for Budget Responsibility (OBR) forecast, that the duty should keep pace with overall prices. 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 generosity of discounts provided to qualifying small producers, increasing the relative value of SPR compared to the main duty rates. 

Background to the measure 

The decision made in relation to Alcohol Duty at Budget 2026 is in line with existing Government policy, as reflected in the OBR forecast. 

Small Producer Relief (SPR) was introduced on 1 August 2023 as part of the 2023 Alcohol Duty reforms, to broaden duty discounts to all small producers of alcoholic products under 8.5% ABV compared to the previous Small Brewers Relief, which was limited to small brewers.  

Detailed proposal 

Operative date 

The new Alcohol Duty rates and SPR discounts will take effect on 1 February 2027. 

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 — £10.41 per litre of alcohol in the product  

• duty on still cider at least 3.5% but less than 8.5% ABV — £10.86 per litre of alcohol in the product  

• duty on sparkling cider at least 3.5% but not exceeding 5.5% ABV — £10.86 per litre of alcohol in the product  

• duty on beer at least 3.5% but less than 8.5% ABV — £23.61 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 — £27.82 per litre of alcohol in the product  

• duty on sparkling cider exceeding 5.5% ABV but less than 8.5% ABV — £27.82 per litre of alcohol in the product  

• duty on all alcoholic products at least 8.5% but not exceeding 22% ABV — £32.01 per litre of alcohol in the product  

• duty on all alcoholic products exceeding 22% ABV — £35.54 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 — £8.97 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 — £9.36 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 — £9.36 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%) — £20.34 per litre of alcohol in the product  

• the reduced rate of duty on sparkling cider exceeding 5.5% but less than 8.5% ABV — £20.34 per litre of alcohol in the product  

Schedule 9 is amended so that for alcoholic products below 3.5% ABV, the discount bands, marginal discount and cumulative discount figures in the tables provide a more generous taper. For alcoholic products 3.5% ABV and above, the marginal discount and cumulative discount figures in the tables are amended to increase the percentage discount.  

Summary of impacts 

Exchequer impact (£million) 

2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
0	-10	-10	-10	-10	-10

Uprating in line with RPI is assumed in the OBR’s baseline forecast and therefore raises no new revenue. These figures set out the exchequer impacts in relation to SPR and are set out in Table 6.1 of Budget 2026 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2026.

Economic impact 

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

Impact on individuals, households and families 

This measure 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 these 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 individuals who consume or purchase alcohol, as it will maintain the tax level on alcoholic products in real terms. 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 as the population who consume more than 14 units of alcohol a week (64%), compared to their prevalence in the UK adult population (49%).    

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 (47%) 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 (56%) compared to in the UK adult population (42%).  

HMRC does not currently hold data on the other protected characteristics of individuals impacted by this measure and so cannot assess if there are any impacts on other protected groups. 

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 will have some impact on the hospitality industry affected by the Alcohol Duty uprating, assuming that alcohol producers increase wholesale prices to reflect the uprating. 

This measure will impact some small and micro businesses affected by the Alcohol Duty uprating and the new SPR marginal discount rates.  

Operational impact (£million) (HMRC or other) 

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

Other impacts 

Other impacts have been considered, and none have been identified.  

Monitoring and evaluation 

Consideration will be given to monitoring this measure through information collected from tax receipts. 

Further advice 

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