On 19 December, the Government announced that Alcohol Duty rates will be frozen by a further six months from February, until August 2023. Any changes to the rates will be announced as part of the Chancellor's budget statement on 15 March 2023. If any changes are announced at the Budget, they will take take effect from 1 August 2023. This has been done to align any changes to duty rates with the implementation dates for the alcohol duty system.
The simplification of the duty system, which will take effect from 1 August 2023, will reduce the number of main rates from 15 to 6, and tax products in proportion to their alcohol content.
All tax categories, such as beer and wine, will be moved to a standardised set of bands, with rates for products between 1.2-3.4 per cent alcohol by volume (ABV), 3.5-8.4 per cent ABV, 8.5-22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories will pay the same rate of duty if they have the same proportion of alcohol content. Registration and payment will also be simplified, and the practice where individual products have different administrative rules will end.
The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change will address the problem of harmful high-strength products being sold too cheaply, and the new rates for low strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.
I welcome the introduction of a new small producer relief which will build on the previous success of the Small Brewers Relief, which will benefit cidermakers and other producers of lower ABV drinks. This will allow small producers to diversify their product range to other products below 8.5 per cent ABV while still benefitting from reduced rates.
Any decision to modify our tax regime is a matter for the Treasury and careful consideration will be given to any proposed amendments to current tax rates. I understand that the Government keeps all taxes under review, including alcohol duty. I shall be following any developments on this issue closely, and I will ensure my colleagues at the Treasury are aware of the strength of feeling on this issue.
The technical details have outlined how new small producer reliefs will be finalised through the alcohol duty review consultation process, and this will include and exploration of the merits of any changes to the minimum juice content through the alcohol duty review consultation. I recognise that the UK has a history of cidermaking dating back thousands of years, a tradition that has produced a variety of cidermaking traditions throughout the country. As you know, the present requirement under the Alcoholic Liquor Duties Act 1979 that 35 per cent of the finished product be made up by apple juice was last revised in 2010, following consultation with cidermakers. I am not aware of any plans to amend this provision in the 1979 Act.
The EU's duty system, like our duty system before these current changes, has different rates of duty for different products as well as for different hectolitres of product or different hectolitres of degree or pure alcohol. It is the desire of my colleagues at the Treasury to move away from such a system to one that is based on alcohol content.