Customs to review progressive beer duty

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Related tags: Progressive beer duty, European union, Brewery

by Claire Hu The Government is to carry out a review of progressive beer duty (PBD) which could see the production limit at which brewers benefit...

by Claire Hu The Government is to carry out a review of progressive beer duty (PBD) which could see the production limit at which brewers benefit being raised six-fold. The news is being seen as a response to complaints from medium-sized brewers that the current system was a disincentive for them to grow and it gave micro brewers an unfair advantage. Customs and Excise is to ask the trade for its views as part of an evaluation, ending on 31 October, which could see the upper limit at which breweries can benefit from duty relief being raised from 18,330 barrels a year to the European Union level of 122,205 barrels. The review is being welcomed, particularly by medium-sized brewers which would gain from the change. St Austell Brew-ery, in Cornwall, benefited from duty relief when the system was introduced in June 2002, but has since grown and no longer gains. It would, however, fall within the EU barrelage limit being proposed by the British Beer and Pub Associa-tion, which is lobbying for change. Managing director James Staughton said: "As a regional brewer it can be just as hard for us to compete with the big companies for listings as the microbrewers. "We are trying to create a national brand and every bit of assistance is needed. Yet in growing, we have gone above the limit and have not yet recouped the rebate we would have got. It could be a big disincentive to growth, especially for the micros." A report by Customs showed that although PBD had increased profits and investment among many small breweries, the impact had been negative among larger breweries producing between 18,000 and 122,000 barrels. It said several had reported that they had lost business to small breweries whose competitive position has been improved by the relief. Several claimed that the production limit was a disincentive to growth. Hertford brewer McMull-ens announced last month that was considering ending contract brewing to gain the benefits of PBD. Lewis Bennett, operations manager of Redruth Brewery which has an annual production of 150,000 barrels, said: "We have the same duty responsibility as the Interbrews and Courages of the world and this is unfair. "Anything that would help us as a medium-sized brewery to develop our business would be welcome. It means we would be able to invest in employment and state-of-the-art equipment." Sliding change Under the current PBD scheme, breweries producing 3,055 barrels or less annually qualify for a reduced rate of half the main beer duty rate. Breweries producing between 3,055 and 18,330 barrels a year qualify for a reduced sliding rate of beer duty calculated according to their level of production, representing potential duty savings of up to £130,000 each. The BBPA wants the upper limit to increase from 18,330 barrels to 122,205.

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