The cost of beer and sparking wine will fall, but whisky and vodka prices will rise, Chancellor Rishi Sunak said in his Budget today.
Currently there is a complicated system of 15 separate tax bands for booze, across four main areas: beer, cider, spirits and wine.
But now the chancellor will do away with the old system and bring in a new one. The stronger a drink is, the more it will be taxed.
This means tax cuts on drinks like normal-strength beer, wine, cider and liqueurs, but tax hikes on spirits like whisky.
The reforms will come in in February 2023.
Sparkling wine costs will fall by around 62p a bottle.
Sunak said he will cut the tax on sparking wine from current levels of £2.88 per litre if the drink has less than 8.5% alcohol or £3.81 if the ABV is between 8.5% and 15%.
Drinkers currently pay £2.85 in tax for a normal 750ml bottle of 12% prosecco, and this will drop to £2.23 once the changes kick in.
How much popular drink prices will change
- Stella Artois, pint - down 3p from £3.80 to £3.77
- Frosty Jacks cider, 750ml bottle - up 45p from £3.70 to £4.15
- Kopparberg strawberry and lime cider, pint - down 13p from £3.80 to £3.67
- Hardy's Merlot wine, 750ml bottle - up 35p from £7 to £7.35
- Blossom Hill rosé, 750ml bottle - down 12p from £8 to £7.88
- Buckfast fortified wine, 750ml bottle - up 81p from £8.50 to £9.31
- Bailey's Irish cream, 750ml bottle - down 41p from £17 to £16.69
All booze will now be taxed in the following way, based on strength.
One rate will apply to drinks between 1.2% and 3.4%, then others on 3.5% to 8.4%, 8.5% to 22% and 22% and above.
Sunak also brought in a new tax relief for pubs, who will pay less tax on draught beer and cider.
The Chancellor told MPs: "It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs who do 75% of their trade on draught. Let me tell the House the new rate: draught relief will be cut by 5%.
"That's the biggest cut to cider duty since 1923. The biggest cut to fruit ciders in a generation. The biggest cut to beer duty for 50 years. This is not temporary, it's a long-term investment in British pubs of £100 million a year. And a permanent cut in the cost of a pint by 3p."
Sunak said the reforms, which he called a "radical simplification of alcohol duties", will come into effect in February 2023.
On his final announcement on alcohol duty, the Chancellor said: "I can confirm that the planned increase in duty on spirits like Scotch whisky, wine, cider and beer, will all, from midnight tonight, be cancelled. That's a tax cut worth £3billion."
What do these changes mean for you? Let us know in the comments below
Currently beer has three tax ranges depending on how strong it is.
If it's between 1.2% ABV and 2.8%, tax is 8.42p per litre.
Between 2.8% and 7.5%, the rate is 19.08p.
If the beer strength is more than 7.5%, the tax rate is a whopping 24.77p.
However, pub owners warned earlier today that the cost of a pint is due to soar by up to 30p as pubs pass on their own rising costs to drinkers.
Pub owners say they have had to shoulder increases in the minimum wage, as well as rising food costs, higher energy bills and higher VAT.
Pubs normally pay 20% VAT, but this was reduced to 5% thanks to government cuts to help the sector weather the pandemic.
In March, Sunak froze alcohol duties for a second year running in his Spring Budget.
