Guidance

Spirits Duty

Find out how to become licensed as a spirits producer, submit production returns and make Spirits Duty payments.

Overview

Spirits Duty is payable on any spirits, or any mixture or combination of spirits with anything else, at a strength of more than 1.2% alcohol by volume (ABV).

Spirits are liable for Spirits Duty as soon as they’ve been manufactured.

Licensing and approval

To produce spirits in the UK by distilling alcoholic liquids or by any other process, such as cracking ethylene gas, you’ll need:

  • a distiller’s licence
  • approval for your plant and process
  • to account for and pay Spirits Duty to HM Revenue and Customs (HMRC)

Apply for a distillers licence

You should complete form DLA1 and send it to the National Registration Unit. You’ll need a licence for every set of premises where you intend to produce spirits.

HMRC can decline an application if the largest still to be used has a capacity of less than 18 hectolitres.

However, HMRC may consider applications where such stills are to be used for commercial production, providing they’re supported by a business plan.

Get your plant and process approved

As well as a distiller’s licence, you should apply to the National Registration Unit for approval of the plant and processes you intend to use in the manufacturing process. There’s no form for this, but your application should contain:

  • the location of the proposed distillery
  • a full description of the manufacturing process
  • the number and description of the vessels used in the manufacturing process and an explanation of their use
  • a plan of the premises

HMRC’s approval of the plant and processes at each distillery may include conditions which it believes are necessary to protect the revenue.

These conditions will be set out in HMRC’s letter of approval and HMRC will review them from time to time. HMRC may add to them or vary them if it needs to.

Redistilled or mixed spirits

If you redistil spirits or compound spirits by using a still, you must have a rectifier’s licence.

If you mix spirits with anything apart from water, but don’t use a still to do so, you must have a compounder’s licence.

Rectifier’s licence

You must apply for a rectifier’s licence using form L5.

If you don’t operate from an excise warehouse, you must also complete an excise entry and have it approved by HMRC before you begin rectifying. You do this using:

  • form EX103 if you’re a private trader (such as a sole proprietor)
  • form EX103A if you’re an incorporated company

Read more on applying for a rectifier’s licence.

Compounder’s licence

If you distinctly alter the character or flavour of a spirit with another substance, other than water, but don’t use a still to do so, you need a compounder’s licence.

This doesn’t include mixed drinks solely for consumption on the premises, for example, cocktails.

You must apply for a compounder’s licence using form L5.

If you don’t operate from an excise warehouse, you must also complete an excise entry and have it approved by HMRC before you begin compounding. You do this using:

  • form EX103 if you’re a private trader (such as a sole proprietor)
  • form EX103A if you’re an incorporated company

Read more on applying for a compounder’s licence.

Responsibilities of licensed spirits producers

If you’re licensed by HMRC as a distiller, you must:

  • secure your premises and the spirits you produce
  • keep accurate records and accounts, and make accurate returns on time
  • take appropriate measures to prevent any losses
  • promptly examine any losses and identify the causes
  • investigate any irregularities

Store spirits in duty suspension

Following production, if you want to store spirits in duty suspension on your premises - for example, for maturation purposes - you’ll need excise warehouse approval and authorisation as a warehousekeeper.

Read more about holding and movement of excise goods in an excise warehouse.

If you do receive approval, you need to:

  • follow the rules and procedures for an excise warehouse
  • display notices
  • understand and follow the restrictions on what activities can be carried out in the warehouse

Read about licensing, approval and responsibilities for distillers for Spirits Duty.

Suspending Spirits Duty

Duty doesn’t have to be paid to HMRC immediately. If you move the spirits directly to an excise warehouse that’s approved to hold spirits in duty suspension, you can suspend payment of Spirits Duty.

Duty becomes payable when the spirits pass a duty point. This is generally when they leave duty suspension for release onto the UK market or when they’re consumed.

Returns and payments

You need to complete a quarterly distillery production return - form W21 - at the end of March, June, September and December each year. You’ll need to complete a return for each different class of spirit you distil.

In order to pay Excise Duty on spirits held in an excise warehouse, you, as the warehousekeeper, must complete either form W5 or form W5D. Alternatively you can use the Alcohol and Tobacco Warehousing Declarations (ATWD) online service.

Read Excise Notice 197 for more information about warehousing, and when to complete forms W5 and W5D.

Spirits Duty rates

Get the latest rate and allowances for Alcohol Duty.

Published 9 November 2009
Last updated 15 November 2017 + show all updates
  1. In section 'get your plant and process approved' a sentence has been removed to make the information clearer.
  2. In section 'apply for a distiller's licence' text amended to provide link to new DLA1 form.
  3. Rates, allowances and duties have been updated for the tax year 2015 to 2016.
  4. First published.