Research and analysis

Understanding Alcohol Producers' Experiences of Alcohol Duty Reforms

Published 28 October 2026

1. Executive summary

1.1 Introduction

Alcohol Duty is a tax charged on alcoholic products with an alcohol by volume (ABV) exceeding 1.2% that are produced or imported and released into free circulation in the United Kingdom (UK). The Alcohol Duty reforms introduced in August 2023 replaced the previous category-based system with a more consistent strength-based approach, where duty generally increases with alcoholic strength. The reforms also introduced Draught Relief to support the on-trade sector, Small Producer Relief (SPR) to support eligible small producers, and administrative changes intended to simplify the system.

It is in this context that HMRC commissioned IFF Research to conduct qualitative research to understand alcohol producers’ experiences of the Alcohol Duty reforms. A total of 60 interviews were conducted with alcohol producers between 27 April 2026 and 5 June 2026.

1.2 Key findings

General views on Alcohol Duty reforms

Awareness of the Alcohol Duty reforms was consistently high among alcohol producers prior to implementation. Understanding was strongest among producers that engaged with trade bodies, industry networks and professional forums, which were widely viewed as valuable sources of practical guidance and interpretation. Producers with access to this external support and established industry networks or specialist software described the transition as straightforward. Producers who relied solely on HMRC communications were more likely to report difficulties understanding the reforms, particularly smaller businesses with limited in-house expertise. These producers often felt the available guidance was complex and not sufficiently tailored to their specific circumstances and exhibited greater uncertainty and concerns about whether they had adapted their systems correctly.

Views of the reforms themselves were mixed and closely linked to their perceived impact on individual businesses. Producers whose duty liabilities reduced under the new system, particularly those producing lower ABV products or benefiting from reliefs, tended to express positive views and regarded the reforms as a logical simplification of the Alcohol Duty system. Conversely, producers making higher strength products were more likely to question the rationale for the reforms and perceived them as introducing additional complexity.

Experiences of the new rates system

Following an initial period of adjustment, producers found calculating Alcohol Duty under the new rates system relatively straightforward. Once calculations had been incorporated into existing spreadsheets, business systems or third-party software, producers reported monthly calculations required little additional effort. Producers who manufactured a limited range of products, used automated systems or already calculated litres of pure alcohol as part of their existing processes found the transition particularly straightforward.

Confidence in duty calculations was often high, especially among producers who had access to additional support from trade bodies, software providers or the SPR calculator. However, confidence was lower among those relying on manual processes, those without access to external support, and those who had previously experienced errors.

While ongoing administration was typically viewed as manageable, several challenges remained. Producers highlighted difficulties associated with calculating duty across multiple products with different ABVs, uncertainty around specific classifications and exemptions, and the requirement to calculate litres of alcohol to 4 decimal places.

Engagement with HMRC guidance was highest in the period immediately before and after implementation in 2023. Views on the guidance were mixed. Some producers found the information clear, comprehensive and easy to navigate, while others felt it was overly complex, difficult to interpret and insufficiently tailored to particular alcohol categories. Producers who attended HMRC webinars regarded them positively, valuing the practical explanations and accessibility of the format. Among SPR claimants, the online calculator was widely praised as a useful and straightforward tool, whereas the associated lookup tables were used less frequently and were often considered difficult to navigate.

Overall, producers reported the new rates system had little ongoing impact on administrative burden, compliance costs or the time required to complete returns. Once systems had been updated, producers often described the calculation process as comparable to that under the previous regime.

Submitting returns and making payments via the new HMRC digital service

Producers’ experiences of HMRC’s digital Alcohol Duty service were overwhelmingly positive. The service was consistently described as straightforward, efficient and easy to use, with producers describing monthly submission as a quick administrative task once calculations had been completed.

The enrolment process was also consistently viewed positively. Producers commonly already held Government Gateway accounts and therefore experienced a straightforward transition onto the new service. While uncommon, some encountered difficulties which were linked to delays in receiving registration information by post, account access issues or uncertainty surrounding business classifications.

Producers expressed a clear preference for the digital system over the previous paper-based and earlier digital approaches. Key benefits included immediate confirmation of submission, the removal of postal delays and lost forms, reduced administrative effort, and greater confidence that returns had been received successfully.

Feedback on the payment process was similarly positive. Producers welcomed the integration of payments alongside return submissions and frequently highlighted direct debit functionality as a major benefit. Direct debit arrangements reduced the need for manual intervention, improved confidence that payments would be made correctly and on time and were perceived as simplifying the overall process. Although some producers experienced isolated technical issues or confusion relating to payment notifications, these concerns did not detract from the overall positive assessment of the service.

Impacts of Alcohol Duty reforms on the business

Business finances and growth

The financial impact of the reforms varied considerably across producers. Some benefitted from reductions in duty liabilities as a result of the reformed rates structure and reliefs, leading to improved profitability. Others reported little material impact, suggesting broader economic pressures, including labour costs, energy prices and inflation, had a much greater influence on business performance than Alcohol Duty changes. At the same time, a number of producers, particularly those producing higher-ABV products, reported increased costs, reduced profitability and challenges to business growth arising from higher duty liabilities. Smaller producers were particularly likely to raise concerns about competitiveness and their ability to absorb cost increases compared with larger businesses.

Product pricing, reformulation and product ranges

The reforms influenced pricing and product development decisions in some cases. Some producers reported increasing prices for higher-strength products to offset higher duty costs, while others chose to absorb increased costs because they believed consumers were already highly price sensitive. Where businesses benefited from lower duty liabilities, excluding the effects from SPR and Draught Relief, the savings were often retained within the business rather than passed directly on to consumers.

There was evidence the reforms have encouraged reformulation and innovation among some producers, particularly among beer and fruit cider producers. Some reported reducing the ABV of existing products, often to fall below key duty thresholds, while others had introduced new lower-strength products specifically designed to benefit from lower rates of duty. However, this behaviour was not universal. Others, particularly wine and spirit producers, felt reducing alcohol content would compromise product quality, alter the nature of the product or undermine established brand identity. As a result, they did not reformulate their products despite potential financial benefits.

The reforms also influenced product ranges for some businesses. A number of producers reported discontinuing higher-strength products due to reduced commercial viability, while introducing lower-strength alternatives. These changes were most evident among beer producers. In contrast, wine producers observed limited changes to their product portfolios as a result of the reforms.

SPR

SPR was widely regarded as an important component of the reformed Alcohol Duty system. For smaller producers in particular, the relief was seen as critical to their financial sustainability and competitiveness, helping to offset the higher production costs associated with operating at a smaller scale. While the financial value of the relief varied across producers, there was a broad consensus that SPR provided meaningful support to eligible producers.

Draught Relief

Views on Draught Relief were more varied than those relating to SPR. Producers with a high proportion of draught sales often described the relief as an important contributor to profitability and a valuable source of support. However, claimants often described its financial impact as small, especially when considering other cost pressures and issues facing the hospitality sector. A consistent theme was that Draught Relief was too small to materially influence consumer behaviour or pub competitiveness.

2. Introduction

2.1 Background

Alcohol Duty is a tax charged on alcoholic products with an ABV exceeding 1.2% that are produced or imported and released into free circulation in the UK. The Alcohol Duty rates system was reformed in 2023 and a new digital service for submitting returns was launched in March 2025.

The main change introduced by the reforms was taxing all products according to their strength (ABV). This change came into force in August 2023. Previously, wine, cider and other fermented products (OFPs) were taxed according to volume.

2 new Alcohol Duty reliefs were also introduced in August 2023, namely:

• SPR — which enables eligible producers (producing less than 4,500 hectolitres of pure alcohol annually) to pay a lower rate of Alcohol Duty on any product with an ABV under 8.5%
• Draught Relief — which enables eligible producers to pay a lower rate on products sold in qualifying draught containers for on-trade consumption, if their ABV is under 8.5%

A new digital service was also launched in March 2025 that required alcohol producers to switch their monthly Alcohol Duty returns and payments from paper to online.

The government has been evaluating the impacts of the Alcohol Duty reforms introduced on 1 August 2023, 3 years on from their implementation. The evaluation aimed to consider how successful the reforms have been in meeting their intended objectives of:

• greater consumer choice, especially of low-strength products
• reduced alcohol-related harm
• improved competitiveness of on-trade via Draught Relief
• supporting small producers via SPR
• reduced admin burden and a simplified process for users

2.2 Aims and objectives

HMRC commissioned this research to understand alcohol producers’ experiences of the Alcohol Duty reforms to assess whether they are meeting their 5 strategic objectives (listed above), with particular focus on objective 5 — reduced administrative burden and a simplified process for users.

More specifically, the research provides answers to the following key research questions:

Question 1: what are producers’ experiences of calculating how much Alcohol Duty is payable and submitting digital returns since the reforms began?

Question 2: what impacts have the reforms had on their business and their decision-making?

Question 3: how has the SPR affected producers claiming it?

Question 4: how has Draught Relief affected producers claiming it?

Findings from the research will also inform HMRC’s wider evaluation of the Alcohol Duty reforms.

2.3 Methodology

To address the aims and objectives, a total of 60 qualitative interviews were conducted with alcohol producers in the UK between 27 April 2026 and 5 June 2026. This included producers across the beer, cider, wine, spirits and OFPs categories:

• beer is ale, porter, stout and some other types of beer, including beer based drinks such as shandy

• cider is product which is obtained from the fermentation of apple or pear juice and has an alcoholic strength of less than 8.5% ABV. For Alcohol Duty purposes, fruit ciders are classed as OFPs rather than cider

• wine products are alcoholic products produced by fermentation of fresh grapes. For labelling purposes, wine has to have a strength of at least 8.5% ABV (subject to some geographical expectations) but for Alcohol Duty purposes, wine can have any ABV strength

• spirits are spirits of any description, including any mixture or compound made from spirits. For Alcohol Duty purposes, products such as spirits based pre mixed cocktails are included within the spirits category

• OFPs means products which are either obtained from alcoholic fermentation of any substance, or obtained by mixing a product gained from the alcoholic fermentation of any substance, but is not beer, wine, a spirit or cider

The report findings categorise businesses as small, medium and large. These are not technical definitions intended to correspond with any Alcohol Duty policies or reliefs, instead they are intended to help indicate any general differences by producer size. Approximately the smallest 60% of producers by total volume of alcohol produced were categorised as small, the next 30% as medium, and the largest 10% as large.

Interviews were conducted with individuals who self-identified as the person in the business responsible for dealing with Alcohol Duty. The interviews took place over the phone or Microsoft Teams and lasted up to an hour.

Further details on the methodological approach can be found in the Technical Annex in Chapter 8.

It is important to note the qualitative nature of the project means the findings reflect the views of participating producers only. They are not generalisable and are not statistically representative of the wider producer population.

Differences observed by type of producer have been included throughout this report. Where none are mentioned, there were no noteworthy differences between groups. Producers of OFPs did not have a consistent experience of the reforms. Instead, their views were mixed, reflecting the more diverse range of products produced.

3. General views on Alcohol Duty reforms

This chapter explores alcohol producers’ views of the Alcohol Duty reforms. It begins by examining their awareness and understanding of the reforms prior to implementation, including how they first became aware of the changes and how this shaped their level of understanding. It then considers producers’ experiences of adapting to the reforms and views of the reforms themselves.

3.1 Awareness of the reforms

Before the new rates system came into effect in August 2023, producers consistently felt they had good awareness and understanding of the Alcohol Duty reforms.

Alcohol producers learned about the new rates system from a range of sources. These included trade bodies, industry contacts, social media and professional forums. HMRC issued letters, guidance and social media posts to communicate the changes, as well as working closely with trade bodies to help them ensure their members were aware and well-prepared.

Producers with stronger awareness and understanding of the reforms tended to have learned about them through trade bodies and industry relationships. As well as providing explanations, these groups helped producers to understand the potential impact of the reforms and gave them practical guidance on calculating Alcohol Duty, making them feel more prepared.

“But if it wasn’t for being part of [my trade body], then I’d have absolutely no idea what I was doing when it all happened.” (Cider producer, medium, claimed SPR and Draught Relief)

Awareness and understanding of the reforms were mixed among businesses that learned about them only through HMRC communications. Producers with stronger in-house expertise expressed better awareness and understanding, as they found the reforms easier to interpret. This was particularly true of larger producers. These individuals explained that they had worked in the industry for a long time or that their role required them to stay up to date with any regulatory changes. In addition, those who took part in the beta trial of the new digital service consistently indicated good awareness and understanding, as using the service provided practical, hands-on learning.

“I was part of the trial, so I had a phone conversation with somebody from HMRC who talked me through it at the start.” (Beer producer, medium, claimed SPR and Draught Relief)

However, producers that relied only on HMRC communications and lacked sufficient internal or external expertise reported lower awareness and understanding. This was more likely to be the case for smaller producers, though this was not exclusively the case. They found the reforms more difficult to interpret and some of them found the amount of online information overwhelming.

Some did not understand how the reforms would affect their business until the new duty rates came into force. These producers wanted more direct, plain-language support from HMRC to help them understand the changes.

“It’s hard to reach out to customs and excise to actually have somebody to run you through these things. You end up with 44 pages of notices and 4 lines are relevant to your business.” (Spirits producer, large, did not claim reliefs)

3.2 Adjusting to the reforms

Producers felt the reforms were straightforward to implement once they had a clear understanding of them.

Those who were better informed found the transition easier. Members of trade bodies, and producers with stronger industry connections, consistently described the transition as easy. This was because of the practical, hands-on support that trade bodies and larger businesses provided producers. This included Excel templates and calculators to help producers calculate their duty, reducing administrative burden and giving businesses a way to check their calculations. Similarly, producers with stronger in-house expertise consistently found the transition to the new rates system easier, as they were better prepared for the change.

Producers using third-party management systems (which HMRC worked with prior to the launch of their updates) also found the transition easier because the software handled the procedural changes to monthly calculations. Third-party management systems are pieces of external software which helps alcohol producers track raw material inventory, schedule brew batches, manage tax compliance and coordinate distribution. As these systems were updated to reflect the new rates system, producers needed little preparation, administration or technical understanding of the regulations to successfully implement them, making adjustment much easier.

“[The] adjustments were fine because I do it all through [my third-party management software] anyway. So, it predicted everything for me. It told me exactly what the rate was going to be.” (Beer producer, medium, claimed SPR and Draught Relief)

By contrast, some producers who had a weaker understanding of the reforms found adjustment more difficult and were more concerned about whether they had adapted their systems correctly.

“There was also just a panic over the changing systems… other distillers were very nervous about how it was going to impact their systems and how they run things internally.” (Spirits producer, small, did not claim reliefs)

This lack of understanding led to confusion amongst these producers around some product classifications and uncertainty about how to calculate duty. These issues sometimes resulted in calculation errors, which are discussed in more detail in Chapter 4.

3.3 General views on the reforms

Overall, producers held varied views on the reforms and their impacts at both business and industry level.

Producers who saw a need for the reforms and viewed them as logical tended to be positive. They felt the new rates system simplified duty calculations by applying consistent rules across product types, while the new digital system made monthly returns easier to submit online. These producers valued the reforms because they made the duty process more straightforward.

“I think they’re long overdue. It’s streamlined some of the more arcane procedures and processes.” (Spirits producer, medium, did not claim reliefs)

Conversely, other producers felt the reforms made calculations too complex and did not reflect the day-to-day realities of running an alcohol business. These producers questioned the need to move to a new system.

At a business level, positive views were also strongly linked to reductions in duty. Producers were more favourable towards the reforms when they felt these benefited their business, particularly where they produced lower-ABV products at 3.4% ABV or below.

“Our actual tax bill reduced quite considerably before August 2023 to afterwards. So, it was a good thing from our point of view at our sort of point in the market.” (Beer producer, medium, claimed SPR and Draught Relief)

The reverse was also true: producers whose duty increased compared with the previous rates system were less supportive of the reforms.

Similarly, producers that qualified for SPR or Draught Relief tended to view the reforms more positively, as these reliefs further reduced the amount of duty they paid. The impacts of these reliefs are explored further in Chapter 6.

Beer and cider producers were more consistently positive about the reforms. This was because they were more likely to produce lower-ABV products and therefore more likely to benefit from the structure of the new rates system.

However, there were some outliers amongst beer producers, who held strongly negative views. These producers made higher-ABV real ales and felt the reforms had harmed their business prospects. Alongside spirits producers, they felt unable to avoid higher duty costs because reducing product ABV would compromise product quality.

While a less consistent finding, some wine producers argued that wine production presented practical challenges that were not fully reflected in the reforms. They highlighted difficulties about the practical application of strength-based duty to wine products, particularly where ABV can vary naturally during production.

Thinking about the industry as a whole, a subsection of small producers — in particular, those producing beer — strongly felt the reforms benefited larger producers at the expense of smaller ones. They perceived larger producers as better able to absorb duty costs, reduce prices and outcompete smaller businesses because of their economies of scale. Larger producers were also seen as better placed to reformulate products with lower ABVs to benefit from the structure of the new rates system.

“The change to the duty bands has been a big advantage to larger brewers who have just moved their session style beers to 3.4%… it’s saving them a fortune.” (Beer producer, Small, claimed SPR and Draught Relief)

There was also a strong sentiment that wider sector pressures had not been tackled, such as high taxation on pubs and competition from lower-priced supermarket alcohol.

On a positive note, some producers felt the new rates could have wider societal benefits by encouraging lower-strength products (which was an objective of the reforms), although this was not a strong sentiment. These producers saw the reforms as an incentive to reduce ABVs, which could help lower alcohol consumption across society.

Finally, some producers were broadly ambivalent about the reforms, seeing them as something they, and the industry as a whole, simply had to adapt to. This was more common among producers whose duty bill changed little or not at all. These producers viewed Alcohol Duty like any other tax obligation.

“We don’t feel put out by it because it’s something that we have to do, it’s something we have to adapt to.” (Cider and OFP producer, medium, did not claim reliefs)

4. Experiences of the new rates system

This chapter explores alcohol producers’ experiences of calculating duty under the new rates system, and how this compares to the previous system. It then covers whether producers consulted relevant HMRC guidance, and SPR claimants’ views on the calculator and lookup tables. The chapter concludes by exploring whether the new Alcohol Duty rates system has affected producers’ business operations.

4.1 Calculating the duty payable

Producers recognised it took some initial effort to learn the new rates structure and set up the relevant systems. However, once internal systems had been updated, producers often found the process of calculating their duty each month relatively simple. This was because the calculation only involved inputting the required figures into their system.

“Once I had built my spreadsheet, not too bad… once it’s working, it’s working.” (Beer producer, medium, claimed SPR and Draught Relief)

Producers were more likely to perceive the calculation process as simple if they only produced one type of alcohol, already calculated how many litres of pure alcohol they produced, or used third-party software packages which calculated the duty for them.

Taken together, these 3 factors reduced the effort needed to transition to the new way of calculating Alcohol Duty, which led to producers’ views that the new rates system was simple. These producers consistently felt they had not made any perceptible changes. As a result, they felt the impacts on their business or duty calculation were negligible.

Producers who thought calculating duty was simple had greater confidence their calculations were correct. Confidence was also increased if the producer had received support from an industry or trade body. The increased awareness and understanding trade bodies provided producers (through practical support, Excel templates and calculators) translated to greater certainty in their processes. Producers noted some trade bodies would also check their calculations. This left them more confident in their ability to calculate their duty rate as the new system came into force, regardless of how complicated they felt the new structure to be. 

Beer producers tended to report higher confidence in calculation than producers of other alcohol types. This was because they typically had access to more numerous means of confirming that they had calculated the duty correctly. Beer producers more consistently reported being a member of an industry or trade body, utilising a third-party management system and were eligible for SPR, which gave them access to the SPR calculator. These 3 avenues allowed these producers to either verify or out-source their calculations, resulting in greater confidence that they were correct.

A reliance on internal manual processes, a lack of clarity around certain definitions and previous mistakes when calculating duty tended to result in some producers feeling less confident in their duty calculations. Producers that relied on internal manual processes felt they had little means to check their understanding or verify their final duty calculation, decreasing their confidence. Furthermore, if producers felt unsure about certain definitions or classifications, this reduced confidence they had applied the appropriate duty rate. Uncertainties included:

• what constituted a finished or unfinished product
• what counted as a fruit cider rather than a cider
• HMRC’s definition of mead

These issues were exacerbated by the fact these producers often lacked external support, in the form of a trade body, professional forum or other industry relationships. Finally, previous calculation errors also led to decreased confidence, even when processes had since been corrected.

“There is a bit of vagueness around what classes as a finished product. For me, it’s not finished until it’s got a label on it and it’s ready for sale.” (Wine producer, small, did not claim reliefs)

Producers identified 3 common issues or difficulties with the calculation process. These were calculating the final duty rate for multiple products at a range of ABVs, the need to calculate the volume of pure alcohol to 4 decimal places and a perceived lack of clarity around how certain products should be classified, defined or excised.

Those making products with a wide range of ABVs typically found calculating the amount of Alcohol Duty payable more challenging, because calculating the total alcohol content across all products became more complicated with more product types and ABVs. A greater range of products required more measurements, multiple calculations for different rates and more administration for producers. These producers felt it was difficult to keep track of these variables, which resulted in their perception that calculating Alcohol Duty was complicated.

The requirement to calculate the litres of alcohol to 4 decimal places was deemed as unreasonable and disproportionate by some. Though it was not a widely held view, where mentioned by producers, they felt very strongly. These producers found it challenging to measure their products to that level of accuracy and remained uncertain whether their reported figures were correct.

“I think the only thing that is slightly crazy is asking for it to 4 decimal places. I mean, it’s unrealistic.” (Spirits producer, medium, did not claim reliefs)

Although mentioned by select cider and beer producers, spirit producers more consistently expressed frustration about the requirement to measure litres of alcohol to 4 decimal places. They thought this level of precision was unrealistic and preferred measuring to 2 decimal places, which was the requirement under the old rate system (except beer producers, who already measured to 4 decimal places).

Finally, the lack of clarity around certain classifications and definitions not only affected producer confidence but also led to some errors in duty submissions. This uncertainty extended to certain scenarios where producers did not know whether duty should be applied. For example, producers did not know whether duty should be applied to a product used for a tasting, gifted as a prize in a competition, or on a product that was about to be exported. Although there were no changes to these rules alongside the 2023 Alcohol Duty reforms, this meant these businesses did not know what to include in their duty calculations, which sometimes led to errors in their submission.

4.2 Use of HMRC Guidance

Producers tended to consult HMRC guidance available on GOV.UK in the lead-up to the new rates system being introduced, but said they now rarely referred back to it. This was either because producers felt they understood what they needed to do from the guidance or struggled to comprehend it originally, preferring to look elsewhere for support.

Those who had engaged with HMRC guidance held mixed views. Differences in opinion emerged amongst producers on the language used, how easy it was to find relevant information and how useful the guidance was.

Producers that had more positive views of HMRC guidance tended to be more technically minded and liked the general structure of GOV.UK websites. These producers felt the language was sufficiently clear and found it easy to navigate to the information they needed, comparing their experience as similarly positive to any other interaction with GOV.UK. This meant they found the guidance more useful to aid in their initial understanding of the new rates system.

“The information was broken down into very specific sectors, with all the rates in one place so they were easy to find. So there wasn’t lots of clicking through screens or anything like that. Everything was in one place which I found very useful.” (OFP producer, large business, claimed SPR)

In contrast, those with negative views of the HMRC guidance said the wording was opaque, finding the information took too long and the guidance was not clear. These producers found certain concepts difficult to interpret, such as what products fell into the other fermented product category or what was meant by ‘cider making’. Navigation issues typically coincided with a general dislike of the structure of GOV.UK websites; these producers felt they had to wade through information about other alcohol types to find what was relevant to their business.

“The guidance is always very word heavy, difficult to wade through. It always feels like it’s deliberately designed to be exhausting so people don’t bother to read it, in all honesty.” (Spirits producer, medium business, did not claim reliefs)

Those producers who had access to other forms of guidance, such as information from trade bodies, professional forums or industry relationships, more consistently reported the HMRC guidance was not very useful to them. These producers engaged less with the HMRC guidance initially, because of their consistent perception this alternative guidance was simple, practical and more specific to their business’s situation.

Producers were consistently more positive about the webinars that HMRC organised to explain the new rates system. These webinars were considered more accessible and easier to understand. Producers that attended appreciated the verbal and broken-down explanations provided in the session, which boosted their understanding of the reforms. It is important to note, however, that engagement with webinars was not very common amongst producers interviewed.

“I remember I went to a HMRC seminar that … it was pretty useful; it was good because it brought it all together and you didn’t have to go searching through the horrible GOV.UK website to try and find the information.” (Beer producer, small, claimed SPR and Draught Relief)

SPR tools

Usage, and perceived usefulness, of the SPR calculator and lookup tables was mixed. However, producers were more consistently positive about the SPR calculator than the lookup tables.

Producers that used the calculator found it clear and straightforward to use. This resulted in a subsection of SPR claimants heavily relying on it for their duty calculations. Other producers reported using the calculator to verify their internal calculations or using it each year when the duty rate increased. Notably, the calculator helped to improve the confidence in calculation of those producers who used it.

“What did prove useful was having an online calculator which could calculate the SPR for me. It asks me the right questions in the right order, and it just pops out the numbers.” (Beer producer, small, claimed SPR)

However, producers who claimed SPR had engaged with the lookup tables less commonly. This was often because they found the amount of information provided in the tables overwhelming and difficult to navigate. There was a strong sentiment the equivalent materials shared by industry or trade bodies was often easier to interpret and use in practice.

4.3 Administrative impacts

Calculating duty payable under the new rates system had a negligible impact on the business operations of producers. This was because, aside from initial changes and disruption immediately after the implementation of the reforms, calculating Alcohol Duty under the new rates system did not require significantly more resource. This was true for all producers regardless of size or alcohol produced.

Producers consistently said the amount of time spent calculating their Alcohol Duty under the new rates system was comparable to the time spent doing so under the old system. For the most part, producers’ calculation processes were automated to some extent, either through third-party management systems or spreadsheets with inbuilt formulas to calculate duty. This meant that monthly calculations generally consisted of entering the required figures, which took a similar amount of time under the 2 systems. Even amongst producers who considered the new rates system more complicated, the time they reported spending on calculating duty did not increase considerably.

“The only thing I do differently is to list the number of bottles that have been sold by their level of alcohol.” (Wine producer, small business, did not claim reliefs)

Producers often perceived they had spent less time interacting with HMRC than they did under the previous system. They attributed this to the transition from a paper-based system to a digital one, which they believed helped to reduce human error. With producers making fewer mistakes on their returns, there was less reason to contact HMRC to resolve issues.

“It’s better because I don’t have to write it out manually on a piece of paper, which I might make errors on while I am writing… I can kind of proof check [online].” (Cider producer, medium, claimed SPR and Draught Relief)

Producers consistently indicated that calculating the amount of duty payable under the new rates system had no discernible impact on their compliance costs. Producers recognised that the main variable influencing compliance costs was time. As the amount of time taken to calculate duty remained broadly the same across the 2 rate systems, compliance costs were also consistent.

5. Submitting returns and making payments via the new HMRC digital service

This chapter starts by exploring alcohol producers’ experience of applying for an Alcoholic Products Producer Approval (APPA), among those who had applied after 1 February 2025. It then covers experiences of HMRC’s new digital service, enrolling, the process of submitting returns and how it compares to the previous paper-based system. The chapter concludes by exploring producers’ experience of making payments via the new service, and the process involved with submission and duty payments among producers who bottle or can products on behalf of others.

5.1 Experience of applying for an APPA

From 1 February 2025, in order to legally produce alcoholic products in the UK, producers need to hold an APPA from HMRC. New producers that had applied since this date generally saw the APPA application process as straightforward and manageable, particularly among those with prior industry or HMRC experience. Producers deemed the process to be simple and easy to follow, suggesting that the core requirements and steps were clearly laid out. Some noted that their familiarity with licensing or compliance processes helped reduce barriers, while others highlighted the clarity of the guidance and structure of the application.

“[The instructions and requirements for applying] were fairly straightforward. We knew what we had to do and what criteria we had to meet and what information was required. So that was quite well laid out.” (Beer producer, medium, claimed SPR)

The online application form was consistently viewed favourably. The digital system represented an improvement over the previous paper-based approach, enabling a smoother and more efficient application experience.

“I remember [the online application system] being relatively slick and relatively easy… I was quite surprised at how slick and easy it was.” (Spirits producer, small, did not claim reliefs)

Feedback on HMRC guidance and support was broadly positive, with producers feeling that it was sufficiently detailed. However, support was considered harder to access when problems arose. Some producers reported facing difficulties when trying to contact HMRC to resolve issues and or to chase for an update on the progress of a submitted application.

A key factor shaping producers’ experiences was their level of prior knowledge or preparedness. Those with existing experience in alcohol licensing or HMRC processes found the application significantly easier, while others noted that external information sources or prior preparation helped them navigate requirements effectively.

“I felt like I was prepared, partially through all the information I got from HMRC and partially through other sources.” (Spirits producer, small, did not claim reliefs)

The main challenges of the approval process cited related to longer-than-expected approval times, which could create uncertainty for producers. Additionally, others experienced confusion about whether APPA applied to their specific business model (as they were redistilling rather than making alcohol from scratch) or struggled with navigating multiple regulatory requirements (for example food standards alongside HMRC requirements).

5.2 Experience of the digital service

Producers’ overall experience of HMRC’s digital service for submitting monthly Alcohol Duty returns was overwhelmingly positive. This was true for all producers regardless of size or alcohol produced. The new service was consistently described as easy and efficient, with producers noting that once the data had been prepared, submission was a minimal task that took only a few minutes each month.

“It’s a non-event… incredibly easy to navigate.” (Beer producer, medium, claimed SPR and Draught Relief)

Beyond ease of use, specific features credited with improving the experience included the move to a single consolidated return in place of previously separate submissions; and the system’s built-in checks, which cross-referenced entered figures and reassured users their calculations were correct.

Against this positive backdrop, a smaller number of specific frictions were cited. Some producers objected to being asked to re-enter net movement (Excise Movement and Control System (EMCS)) data that they felt duplicated information already held elsewhere on Government Gateway and was irrelevant to the duty calculation itself. EMCS is a UK and EU-wide computer system that’s used to record movements of excise goods taking place within the UK and the EU. Meanwhile, others raised concerns about the system’s handling of errors after submission.

While an inconsistent finding, some medium and large producers were more critical of the interface itself, describing it as dated or ‘clunky’ compared with modern commercial platforms, while others felt the explanatory language and terminology used could be difficult for newer entrants to the industry to follow. Suggestions for further improvement included clearer in-context guidance on unfamiliar terms, digital rather than postal submission reminders, and closer integration with producers’ own accounting or production software so that figures could be pulled through automatically rather than re-entered manually.

5.3 Experience of enrolling

The enrolment process was consistently considered to be smooth and straightforward by producers, regardless of their size or types of products produced. The most common explanation for this was that producers already held a Government Gateway account or Business Tax Account for other purposes, meaning the Alcohol Duty service was simply added to their existing profile rather than requiring a fresh application. The process was felt to be quick and easy, with some producers struggling to recall specific details as they did not experience any issues.

“Because we already had a business tax account… it simply added [the service]…very straightforward.” (Spirits producer, medium, did not claim reliefs)

A recurring point of friction, however, concerned the reliance on a physical letter sent by post to obtain their registration details. Some producers noted this arrived very close to the deadline, and some suggested this had caused other producers in their network to miss the transition deadline altogether.

While less consistent, some producers experienced initial issues accessing the system, either through the system crashing or confusion over what the relevant service was called within the Government Gateway, or where their particular business fitted within the categories HMRC used (for example, distinguishing ‘growers’ from ‘producers’). Suggestions for improving the enrolment process were limited overall, though one producer proposed a short instructional video for those going through the sign-up process for the first time.

5.4 Process and confidence of submitting returns

Producers across all sizes and product types were positive about the process of submitting Alcohol Duty returns via the HMRC portal. Some producers stated that they tended to input all the relevant figures in an Excel data sheet separately which contained conditional formatting and formulas to check the data, before then inputting it into the HMRC digital system. Others described having fully integrated third-party software that automatically recorded all the information needed, which they then used to input into the HMRC digital system. The online submission step itself was consistently described as taking 5 to fifteen minutes, with the majority of the time spent on the calculation rather than the submission itself.

“I just take the data and enter it into the web form.” (Spirits producer, medium, did not claim reliefs)

Where challenges were raised, they tended to relate to specific cases rather than the core process. Some producers pointed to difficulty handling products that crossed duty categories (such as fortified wine spanning the wine and spirits bands), for which no clear reporting field existed. Some producers also found the requirement to re-enter largely unchanged information every month unnecessarily repetitive, and they suggested the system could retain answers from the previous submission.

Confidence in the accuracy of submissions was consistently high, though this confidence was generally rooted in trust in producers’ own internal record-keeping and software rather than in HMRC’s system itself. Producers were mostly clear that the platform’s checks would catch input errors but felt they could not validate their judgement on the correct product classification behind the figures being submitted. The built-in prompts and validation features were typically seen as helpful safeguards against rushed entry, however others, particularly those with long-established internal routines, felt they made little practical difference.

5.5 Comparison to the paper-based system

Producers expressed a strong and clear preference for the new digital system over the previous paper-based system. The main benefits cited were the removal of postal risk and the reassurance of an immediate confirmation of submission, in place of the uncertainty that came with posting a form and waiting to discover whether it had reached HMRC. Some producers specifically recalled previous incidents where a paper return had gone missing or been delayed in the post, and therefore the move to the digital service removed the risk of this happening.

“A couple of times under the old regime, when you had to send in the paper return, we were contacted by HMRC saying that we hadn’t paid our duty and then I had to get in touch and say we have. But there’s been nothing like that since the new system was implemented.” (Wine producer, large, did not claim reliefs)

Producers also highlighted that the online submission reduced the administrative burden of having to travel to a post box to mail their submission, with producers in more rural areas being particularly positive in this regard.

Some producers highlighted that the online system reduced the risk of errors, through HMRC’s built-in checks helping to flag inaccuracies.

Not all producers had experience of the paper-based submission to draw on, since a number had already been submitting through earlier digital or semi-digital routes (including manual, email-based workarounds) for some years before the current service was introduced. Where this was the case, producers typically described the prior process in more negative terms than the current system, citing slow, unreliable exchanges with HMRC rather than paper itself as the source of frustration. Meanwhile, others felt the change had made little real difference to them personally, arguing that the substantive preparatory work involved in calculating a return remained unchanged regardless of the submission method used.

Producers who felt the change had made ‘no real difference’ to them personally were concentrated among medium and larger beer and cider producers. In several cases, these businesses had already been submitting through an earlier digital route (such as an online EX606 submission) before the current service was introduced. This meant the paper-to-digital shift itself was less transformative for them than it was for producers coming from a genuinely paper-based starting point.

5.6 Experience of making payments via the new digital service

Producers’ feedback on making payments via the new digital service was largely positive. Producers consistently described the payment process under the new digital system as straightforward, easy to use, and significantly improved compared to previous methods.

Producers reported positive experiences that payments were now integrated into the returns process, often requiring minimal effort. They therefore felt that the digital service had simplified the administrative burden associated with paying Alcohol Duty, while also providing greater confidence that payments had successfully reached HMRC compared with previous arrangements where payments could be difficult to track or reconcile.

“It gives you the peace of mind knowing that you have paid because you paid through a portal rather than making a payment and hoping that they pick it up.” (Spirits producer, small business, did not claim reliefs)

Producers commonly used direct debits to make payments and regarded this as one of the most beneficial elements of the new system. Producers appreciated that once a return had been submitted, payment was collected automatically, reducing the need to remember deadlines or manually transfer funds. Direct debits removed effort from the process and provided confidence that the correct amount would be taken at the appropriate time.

“I don’t need to worry about remembering to pay it because it just gets paid by direct debit.” (Wine producer, large, did not claim reliefs)

Producers who had experience of the previous payment arrangements often contrasted the new system favourably with earlier manual processes. They noted that the previous system relied on payment references and manual allocation of payments, which could create uncertainty and lead to administrative follow-up. In comparison, the digital service was viewed as more reliable and gave users greater assurance that payments had been correctly received and allocated.

While feedback on the payment process was largely positive, there were a few issues highlighted. The most commonly mentioned concern related to the interaction between direct debit arrangements and system messaging. Some producers found it confusing that the system continued to display payment options or prompts to set up a direct debit after one had already been established. They felt the journey could be simplified by automatically recognising existing direct debit arrangements and clearly confirming the collection date.

“If there’s direct debit already there… it shouldn’t be giving you options about, do you want to pay now or do you want to accept direct debit?” (Wine producer, small, did not claim reliefs)

While less consistent, some producers experienced technical difficulties where the website was temporarily unavailable, or the page crashed when they attempted to make the payment. There was also some confusion with payment allocation, whereby a duty payment did not get allocated to the return the producer thinks it is going to.

Some producers also commented on HMRC communications associated with payments. These producers felt reminder letters or notices were sometimes unnecessary, arriving after returns had already been completed or being issued earlier than required. They suggested that communications should better reflect the status of completed submissions and payments.

“Make sure [HMRC’s] system doesn’t send out reminder notices when somebody has actually completed and filled in their form.” (Spirits producer, small, did not claim reliefs)

While not directly linked to the payment process, some producers highlighted the limited flexibility in the scheduling of payments. They explained that the requirement to pay the duty before products are sold could create cash flow challenges.

6. Impacts of Alcohol Duty reforms on the business

This chapter explores the extent to which the Alcohol Duty reforms have impacted business finances and growth, product pricing and the products produced. It then goes on to explore impacts of the SPR and Draught Relief among claimants.

6.1 Business finances and growth

The Alcohol Duty reforms have had a mixed impact on the finances and growth of individual producers.

Some producers reported that they had directly benefited from the reforms — specifically the restructuring of the Alcohol Duty rates, meaning they were paying less Alcohol Duty on their products.

“The duty aspect is critical. It makes a huge impact. At one point, duty accounted for 40% of our turnover. It was by far the biggest expense in the business, even more than wages. It’s now down to about 25%.” (Beer producer, large, claimed SPR and Draught Relief)

Producers also recognised HMRC’s new digital service had a small impact on their business finances by creating efficiencies and savings in time.

Others felt that the general impact of the reforms on their business had been minimal overall — seeing it as having little or no impact on their finances or business growth. This was because the move to an ABV-based system did not materially change their duty liability or because wider economic pressures, such as energy costs, labour costs, and inflation had a greater influence on growth and financial performance. They subsequently did not hold strong views on the impact of the reforms. However, some producers felt that the government needs to do much more to support smaller producers and the wider hospitality sector, which they felt faced significant challenges.

Some expressed negative financial pressures linked to duty increases, which have affected profitability, sales, and viability. Producers of higher-ABV products were more likely to report a negative financial impact, since duty under the new system scales directly with alcohol content. In some cases, these impacts were described as severe, with declining sales and reduced business activity, for example some stated they had lost clients due to needing to increase their prices. These producers expressed a stronger view on the financial impact of the reforms.

Smaller producers were more likely to report that the reforms reduced profitability and competitiveness, and increased vulnerability to larger competitors who they felt could absorb costs more easily. However, a group of very small producers highlighted positive effects of lower overall duty liabilities and easier online reporting and administration.

6.2 Product pricing

The impact of the reforms on product pricing varied. While some producers reported increasing the prices of some of their higher strength products due to increased duty costs, others reported reduced margins where increases could not be passed on fully to consumers.

Producers stated they faced a tension between maintaining profitability and keeping products affordable in a market where consumers were already highly price sensitive. Some businesses explained that they were unable to pass on further duty increases because they believed they had already reached the maximum price consumers would pay.

“We were already at the top end of what people can afford to buy. …So we couldn’t pass any more duty increase onto them.” (OFP producer, small, did not claim reliefs)

Pricing pressures were most evident among beer, spirits and other fermented product producers, particularly where products had higher ABVs and therefore attracted higher duty liabilities.

Wine producers, particularly those producing lower-alcohol wines, were more likely to report neutral or positive pricing impacts, particularly where previous disadvantages relating to sparkling wine duty had been removed. Still and sparkling wines are now charged at the same rate, when previously sparkling was charged at a higher rate.

Some smaller producers stated that where duty savings had been generated, these benefits were retained within the business rather than being passed on to consumers through lower prices. This is likely at least in part linked to the increase in other costs observed by businesses, such as labour costs.

Only one producer reported passing their duty savings on to customers, when selling their product to pubs. This was a producer of beer who claimed both SPR and Draught Relief. Meanwhile, one spirits producer said they expected to reformulate one of their existing products in order to make the pricing more accessible (due to the lower Alcohol Duty).

“We are likely to take one of the brands and take it from…it’s currently at 41% ABV. We might take it down to 37 and a half and make it more of an accessible product and perhaps promote it more towards supermarkets.” (Spirits producer, small, did not claim reliefs)

6.3 Reformulation of existing products

Some producers explained that they had reduced the alcohol content of some of their products in direct response to the Alcohol Duty rates changes. This was particularly evident among beer and fruit cider producers, often adjusting products to fall below the 3.4% ABV threshold. Producers described ABV as becoming a much more important consideration in product development and recipe design following the reforms.

“We’ve taken our [product] down to 3.4% to benefit from the lower rates. We create new beers every year and we’ve created them with ABV in mind more now.” (Beer producer, medium, claimed SPR and Draught Relief)

Lower duty rates enabled through product reformulation helped producers to maintain their profit margins and enabled them to keep their prices competitive. In some cases, this reformulation was essential to remain commercially viable, particularly where duty differences between bands were substantial.

However, reformulation was not universally accepted. Some producers, in particular wine and spirit producers, felt strongly that reducing alcohol strength would compromise product quality, damage brand identity, or create consumer expectations for lower prices. These businesses preferred to maintain their existing products despite potentially missing out on duty savings.

“Our alcohol levels are suitable for our product and they are what they were and we want to keep continuity. We don’t want to start altering the alcohol percentages to save a bit of tax.” (Spirits producer, small, did not claim reliefs)

6.4 Changes to products offered

The reforms influenced the product ranges offered by some producers, primarily through taxing products in line with their alcoholic strength and thus increasing interest in lower-strength alternatives. Some producers reported withdrawing stronger products altogether because duty costs made them difficult to sell at a competitive price.

“We don’t do anything over 8% now where we used to do 13% beers…Because it’s too expensive the way they’ve done the bands.” (Beer producer, medium, claimed SPR and Draught Relief)

For some brewers, the reforms encouraged the introduction of lower-strength products designed and developed specifically to benefit from lower duty rates to align with the revised structure.

Despite this, some producers questioned the commercial demand for lower-strength products. Some producers reported resistance from pubs and consumers, particularly in traditional beer markets where customers were perceived to prefer standard-strength products.

“If you try to sell a 3.3% product to a bar, the landlord of the pub is not interested because his customers are uninterested. If people go down to the pub, they want to have a proper drink. They don’t want to have a driver’s drink or a low alcohol beer.” (Beer producer, medium, claimed SPR)

In contrast, while a less consistent finding, some producers said they were exploring non-alcoholic products, although they typically attributed this to broader market trends rather than the duty reforms themselves.

“A healthy lifestyle and consuming less alcohol, I think, is more of a thing than it’s ever been. So I certainly think that has enabled that market to open up, which maybe ourselves and others have taken advantage of… the lower alcohol and the lower [duty] rate at the same time.” (Beer producer, large, claimed SPR and Draught Relief)

“I am looking at doing a non-alcoholic range. Still very much in the development stage, but it’s not really duty motivated. It’s more just because of the way consumer habits are changing.” (OFP, small, did not claim reliefs)

Other producers, however, reported making no changes to their product portfolios, either because the reforms did not materially affect their products or because they wished to preserve their brand identity.

Beer producers were most likely to have introduced new lower-strength products and withdrawn higher-strength products. Meanwhile, wine producers reported fewer changes to product ranges, explaining that production decisions were driven by grape-growing conditions, wine style, and customer demand. Equalising duty rates for still and sparkling wine had little or no impact in most cases. There was no evidence of producers starting to produce sparkling wine as a result, nor increasing the amount produced where they did produce it. However, some said that having the same duty rate simplified calculations and administration.

There was limited evidence of changes to product portfolios among producers of other types of alcohol. However, some producers of spirits and OFPs said they may look to adjust future product strategies, such as introducing lower-strength or alcohol-free variants. 

6.5 Impacts of SPR

SPR enables eligible producers (producing less than 4,500 hectolitres of pure alcohol annually) to pay a lower rate of Alcohol Duty on any product with an ABV under 8.5%.

SPR was widely viewed as essential for financial viability and competitiveness, particularly for the smallest producers. Producers stated that without the relief they would struggle to remain in business, as it helped offset the higher unit costs faced by smaller producers that lack the economies of scale of larger manufacturers. SPR was believed to be a key lever in enabling smaller producers to price their products competitively.

“If SPR wasn’t available, then this brewery wouldn’t exist. I think it’s the only competitive advantage we have over the big players.” (Beer producer, medium, claimed SPR and Draught Relief)

While some producers described SPR as transformative, others expressed a more modest or marginal financial benefit, especially for those producing towards the upper end of the 4,500 hectolitre threshold or those who sold lower volumes. Some producers noted that while the monetary value of the relief was modest, any reduction in duty was welcome given wider cost pressures facing the sector.

Some producers believed the eligibility threshold for SPR was too high. These producers felt that this resulted in some businesses they perceived to be very large receiving duty relief when they did not need it.

“There are some very large operations that will still get relief…which means that they’ve got enough money to pay the full duty rate. Personally, I don’t have the economy of scale of a large brewery and I really don’t think the taxation rates capture the essence of the differences in economies of scale.” (Beer producer, small, claimed SPR and Draught Relief)

The impact of SPR on business growth was mixed. Some producers felt the relief had supported business growth by improving margins and enabling investment, whereas others observed little direct impact on growth because broader economic conditions and market demand were more influential. A number of producers noted that the relief had helped sustain their businesses over time rather than driving expansion.

Administrative burden was almost universally described as low or unaffected by the relief itself. Those who discussed administration typically considered the process manageable, although some highlighted challenges in understanding production calculations and determining eligibility.

“A clarification about the annual production. That was the thing I had problems with… the actual formula is quite difficult to implement, but the [SPR] calculator made it easier.” (Cider producer, small, claimed SPR and Draught Relief)

A consistent finding was that SPR could be improved through more generous relief rates, wider thresholds, or changes to banding arrangements. Producers argued that current relief levels do not fully account for the challenges faced by smaller producers when competing against larger businesses.

“They could extend the scope considerably in terms of the discount. We should be paying a quarter of the big boys, not half.” (Beer producer, large, claimed SPR and Draught Relief)

Some small wine producers, and to a lesser extent spirits producers, highlighted that they felt excluded from reliefs. Wine producers in particular expressed strong feelings of unfairness, comparing their position unfavourably with cider producers and arguing that comparable small businesses faced very different duty treatment.

“If we were producing this many litres of cider, we would not be paying any duty whatsoever. If we were producing this much beer, we’d be paying half the duty we’re paying now. We produce one bottle of wine — we pay full duty.” (Wine producer, small, did not claim reliefs)

On whether producers passed the savings from SPR on to on-trade venues (pubs and bars), responses were mixed. Some said they did pass on most or all of the relief’s value, framing this as central to remaining price-competitive when selling to pubs.

“Yes, that’s what gives us a competitive advantage when we’re selling into pubs and bars… I would say we pretty much pass on the full relief.” (Beer producer, medium, claimed SPR and Draught Relief)

However, others described the relief as embedded into overall costing and pricing decisions rather than passed on as a distinct, conscious choice, while a further group said they did not pass it on at all. This was often because their margins were already too tight to separate it out, or because a small producer’s costs are different enough from a large producer’s that the relief did not translate into spare margin once prices were set competitively.

SPR claimants interviewed for this research were primarily beer producers. Within beer, though, the scale of the benefit reported varied hugely by how close a producer sat to the relief’s thresholds, from “tremendous” impact for the smallest producers to “minimal” for those further up the scale. A distinctive concern raised only by beer producers was that the relief’s taper can act as a disincentive to grow once a business nears the top of the range, since each additional litre produced reduces the discount received, and some beer producers also described staying within specific ABV bands, or dropping stronger products altogether, specifically to preserve or maximise eligibility. It should be noted that the taper under SPR was still designed to be more gradual than the previous taper under Small Brewers Relief (SBR), explored below.

Comparison between SPR and SBR

Introduced in 2002, SBR was a UK Alcohol Duty scheme that allowed small breweries (producing under 5,000 hectolitres of beer annually) to pay reduced beer duty. Production between 5,000 and 60,000 hectolitres of beer had a tapered relief, gradually reducing the discount until the full duty applied above 60,000 hectolitres. SBR was replaced by SPR in August 2023.

Beer producers said that the transition from the SBR to SPR has had limited or no impact, seeing little difference between them. Some said they could not recall the distinction between the 2.

Among those who did identify a difference, opinions were mixed. Some felt the SPR was slightly more favourable, particularly for very small producers due to more gradual tapering of the duty relief.

“Much better because the tapers are more favourable towards smaller producers.” (Beer producer, medium, claimed SPR and Draught Relief)

However, other beer producers preferred the previous SBR system, describing it as simpler and, in some cases, more advantageous.

6.6 Impacts of Draught Relief

Producers had a more varied experience of Draught Relief than SPR. For some businesses, particularly those with a high proportion of draught sales, the relief was viewed as highly beneficial and an important contributor to profitability and growth.

“Draught is probably about 80% of all our output. So yes, by not having it, obviously our margins or our growth would be hugely affected.” (Beer producer, large, claimed SPR and Draught Relief)

However, others claiming Draught Relief described its financial impact as small, especially when considering other cost pressures and issues facing the hospitality sector. A consistent theme was that Draught Relief was too small to materially influence consumer behaviour or pub competitiveness.

Producers often used the relief to maintain margins or avoid price increases, regarding the value of the relief as too small to materially reduce prices charged to customers.

Suggestions for improvement consistently focused on increasing the size of the discount, for example, one producer specifically proposed an extension to 50% compared to the current discount of 14%. Another producer suggested eligibility should be restricted to producers who also qualify for SPR, since larger multinational brewers can currently claim Draught Relief too.

Administrative impacts were limited, although some producers highlighted complexity around the eligibility of takeaway sales and different methods of serving draught products. These producers felt further clarification from HMRC would be beneficial.

On passing the relief through to on-trade venues, the pattern closely mirrored that seen for SPR. Some producers, especially those most reliant on draught sales, said they passed on most or all of the value, framing this as important to helping pubs survive and to remaining competitive against supermarkets.

“[I pass on the full value] because they need as much help as they can get…If they go out of business, I go out of business. So therefore I have to do everything I can to keep them there.” (Beer producer, medium, claimed SPR and Draught Relief)

Others said they did not pass savings from the relief on directly, either because the relief was too small relative to other rising costs to isolate as a distinct saving, or because their pricing was not itemised in a way that separated it out from overall cost changes.

Similar to SPR, Draught Relief claimants interviewed for this research were primarily beer producers. Beer producers again showed the widest spread of views, split fairly evenly between those for whom the relief was genuinely significant (particularly producers selling predominantly draught) and a larger recurring group who felt the discount was too small to matter in practice, relative to overall cost pressures. Suggestions to extend the discount, or to restrict eligibility to genuinely small producers (since large multinational brewers can currently also claim it), came exclusively from beer producers.

7. Conclusions

7.1 What are producers’ experiences of calculating how much Alcohol Duty is payable and submitting digital returns since the reforms began?

Producers reported positive experiences of calculating Alcohol Duty and submitting returns under the reformed system. While the introduction of the new rates structure required an initial period of adjustment, producers felt that calculating duty became straightforward once systems, spreadsheets or software had been updated, with digital returns submission saving time compared to the previous paper-based approach.

Experiences were influenced by access to support and existing expertise. Producers with access to trade bodies, industry networks, specialist software or HMRC’s beta testing activities were more confident in their calculations and found the transition easier. Those relying on manual processes were more likely to report uncertainty around classifications, definitions and calculation requirements. Beer producers tended to report the highest levels of confidence, while spirits producers were more likely to raise concerns about the requirement to calculate litres of alcohol to 4 decimal places. Producers with a wide range of products and ABVs were also more likely to view calculations as complex.

Experiences of HMRC’s digital service were overwhelmingly positive across all producer sizes and alcohol categories. Producers consistently preferred the new digital system to previous paper-based and earlier digital approaches, highlighting ease of use, faster submission, reduced administrative effort, immediate confirmation of receipt and greater confidence that returns and payments had been processed correctly. While some isolated issues were experienced relating to enrolment, technical problems and error correction, these did not detract from the overall positive view of the service.

7.2 What impacts have the reforms had on their business and their decision-making?

The impacts of the reforms on businesses were mixed and largely determined by whether producers experienced an increase or decrease in their duty liabilities. Producers who benefited from lower duty rates, particularly those producing lower-ABV products, often reported positive impacts on profitability. In contrast, producers of higher-ABV products were more likely to report increased costs, reduced margins and negative impacts on competitiveness. Producers emphasised, however, that wider economic factors such as inflation, labour costs and energy costs have had a greater influence on business performance than the reforms themselves.

The reforms influenced commercial decision-making for some producers, particularly in relation to product development. Beer and fruit cider producers were most likely to report reducing ABVs, introducing lower-strength products or withdrawing higher-strength products to benefit from lower duty rates. By contrast, wine and spirits producers were less likely to reformulate products, often citing concerns about product quality, brand identity and technical constraints.

Differences were also evident by producer size. Smaller producers were more likely to express concerns about competitiveness and felt larger businesses were better placed to absorb costs, reformulate products and take advantage of opportunities created by the new system.

7.3 How has SPR affected producers claiming it?

Among claimants, SPR was widely regarded as an important source of support for smaller businesses. Producers commonly expressed that it helped offset the higher costs associated with producing at a smaller scale and improved their ability to compete with larger producers. For some businesses, particularly the smallest producers, the relief was viewed as critical to long-term viability.

The scale of benefit varied between claimants. While some reported substantial financial advantages, others viewed the benefit as more modest but nevertheless valuable in the context of wider cost pressures. Administrative impacts were limited, with most producers reporting that claiming the relief was manageable once eligibility requirements were understood.

7.4 How has Draught Relief affected producers claiming it?

Draught Relief was viewed positively but was seen as having a more limited impact than SPR. Producers with a high proportion of draught sales often described the relief as an important contribution to profitability and competitiveness within the on-trade sector. However, claimants often felt the value of the relief was too small to have a meaningful effect on consumer behaviour or significantly improve the competitiveness of pubs relative to supermarkets.

Claimants often reported using the relief to maintain margins or offset rising costs rather than lowering prices charged to consumers, although some supplying on-trade venues reported passing the relief on. Beer producers, who made up most Draught Relief claimants, displayed the greatest variation in views. Those most reliant on draught sales were more likely to describe the relief as significant, while others characterised it as having only a marginal impact. Administrative burdens were typically low, although some producers sought greater clarity around eligibility in specific circumstances.

Overall, the findings suggest that Draught Relief provides valued support to producers supplying the on-trade sector, but that its impact is viewed as less substantial and less transformative than that of SPR.

8. Technical Annex

This chapter includes further information on the methodological approach used for this research project. It covers the approach to recruitment, as well as the profile of the completed interviews by key characteristics. There is detail on the approach used to design the research materials, data analysis and a final section on interpreting qualitative findings.

8.1 Sampling and recruitment

The sample for this research was provided by HMRC, drawn from HMRC Alcohol Duty returns. Where telephone numbers were not available, a telephone matching exercise was undertaken through Sagacity Solutions.

An opt-out exercise was conducted prior to recruitment. A total of 1,476 producers were sent a letter outlining the purpose of the research and were given the opportunity to contact the research team if they did not wish to take part.

Following a 2 week opt-out period, eligible alcohol producers were contacted by IFF’s in-house qualitative recruitment team. Recruiters administered a screening questionnaire to confirm the accuracy of the sample information and ensure only those that had produced products that were subject to Alcohol Duty in the last 12 months were recruited. Additional information such as whether producers claimed any reliefs and how they paid their Alcohol Duty was also collected to inform the quotas. 

A series of minimum targets were set to ensure that the research captured the perspectives of a wide range of different types of producers by size of producer, type of alcoholic product(s) produced, whether the producer claimed SPR and or Draught Relief, and method of Alcohol Duty payment.

Profile of achieved interviews

Tables 1 to 3 show the profile of producers that participated in the research. 

Table 1. Profile of achieved interviews by producer size

Producer Size	No. Interviews
Small	22
Medium	27
Large	11

Table 2. Profile of achieved interviews by type of alcohol produced

Type(s) of alcohol produced	No. Interviews
Beer	26
Wine	10
Spirits	13
Cider	10
OFPs	9

Table 3. Profile of achieved interviews by type of relief claimed

Type(s) of relief claimed	No. Interviews
SPR	34
Draught Relief	25

8.2 Research materials

A semi-structured qualitative topic guide was developed by IFF whilst working closely with HMRC. Questions were tailored where necessary to suit the alcoholic product and relief claims of the producer, but the same structure and topic areas were used across groups to facilitate comparison. The structure of the topic guide was as follows:

1. An introductory section capturing business context, the participants’ role in the business, with particular emphasis on their role in submitting Alcohol Duty returns.
2. A section capturing the general views of producers on Alcohol Duty reforms, their understanding of the reforms before they were introduced and their experience adjusting to them.
3. A section exploring alcohol producers’ experience of calculating the duty payable under the new rates system, including their use of HMRC guidance and SPR calculator and lookup tables, where applicable.
4. A section on producers’ experiences of submitting returns and making payments via the new HMRC digital service and how this compared to previous paper-based returns
5. A final section about the impacts of the Alcohol Duty reforms on businesses, including the effects of SPR, Draught Relief and wine equalisation, where relevant.

8.3 Fieldwork

A total of 60 interviews were conducted between 27 April 2026 and 5 June 2026. Interviews were conducted with individuals who self-identified as the person in the business responsible for dealing with Alcohol Duty. The interviews took place over the phone or Microsoft Teams and lasted up to an hour.

As an incentive, IFF Research donated £50 to one of 9 shortlisted charities for every completed qualitative interview. These charities were Great Ormond Street, Centrepoint, British Heart Foundation, Macmillan Cancer Support, Shelter, Little Village, Mind, National Literacy Trust and The Woodland Trust.

8.4 Analysis

Analysis began during the data collection phase, through active listening and formulating questions during the interviews, to gain further insights. Interviews were recorded with producers’ permission and transcripts from the interviews were subsequently analysed in Quirkos, a qualitative analysis tool.

Quirkos enables the management of large volumes of qualitative data and facilitates complex analysis at both subgroup and thematic levels within an overall matrix. Quirkos software allows for deductive coding where the research questions were used to establish a coding framework ahead of analysis and the interview content is mapped against it.

Once all interviews were analysed in Quirkos, interviewers undertook personal analysis of specific themes from the interviews and the research team came together for an analysis session. During this session, the research team discussed interpretations and thematically analysed the data. The results of this discussion were then used to agree key findings and the blueprint of the report.

8.5 Interpreting qualitative findings

A qualitative approach was chosen as it provides in-depth insight, allowing interviewers to explore producers’ experiences of the Alcohol Duty reforms in a detailed and nuanced way. By design, the qualitative discussions set out to capture a rich and detailed understanding of different behaviours and experiences, not to determine their prevalence.

The qualitative nature of the project means that the findings reflect the views of participating producers only. They are not generalisable and are not statistically representative of the wider producer population.

---