Progressive beer duty review welcomed by brewers

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Related tags: Progressive beer duty, Brewers, Duty

More brewers could be reaping the benefits from progressive beer duty (PBD) following a government review.Customs & Excise has launched a...

More brewers could be reaping the benefits from progressive beer duty (PBD) following a government review.

Customs & Excise has launched a consultation into the effects of PBD and could extend it to medium-sized brewers.

The result could be that 27 regional brewers, which are currently excluded from the scheme, could benefit from a duty cut.

While smaller brewers have recouped the benefits from a sliding duty scale, medium-sized brewers missed out because they exceeded the cut-off limit of 18,330 barrels a year. They say the low level means they are being squeezed out of the market.

It is hoped that the upper limit could be extended to cover 122,205 barrels, which would benefit brewers such as Hertford-based McMullen's.

The brewer announced in June it was considering cutting production to gain the benefits of PBD.

James Clarke, director of Oxfordshire brewer Hook Norton, has welcomed the move.

He said: "We are pleased we have the opportunity to supply evidence and will be lobbying for the limit to be increased."

The brewer produced 1,000 barrels above the limit when PBD was introduced last year and it also considered a cut in production because of the financial implications.

"We looked at dropping production but that could have meant redundancies," said Mr Clarke.

"We now contribute over £1.5m in duty a year to the government and we have been doing that for 154 years and it's about time we got something back. It is a squeeze on our business. It would only cost the government about £3m to up the limit."

Mark Hastings, spokesman for the British Beer & Pub Association, which has been lobbying for the increase, said: "We will be putting forward our views that the limit should be increased to 122,205 barrels.

"We are delighted the consultation is under way and will be arguing that this is the way forward."

Mike Clayton, managing director of Cumbrian brewer Jennings, said: "We have been disadvantaged by PBD and it isn't a level playing field for companies such as ourselves.

"We have seen more microbrewers set up, producing more beers and marketing more aggressively.

"A company of our size is being squeezed from both sides - by the smaller brewers as well as having to compete with the big boys."

John Healey, economic secretary to the Treasury, explained the review.

"There are over 400 small brewers in the UK and the government is determined to ensure that they have the chance to compete with others in the industry," he said.

"That is why I am launching a 'call for evidence' from trade representatives, consumer groups and brewers of all sizes, as part of our formal review of the changes we made."

Keith Bott, chairman of the Society of Independent Brewers, said: "There is a case to argue for increasing the limit. We have some members that are just outside the limits and are feeling the effects.

"We will be responding to the Customs & Excise request."

Issues being discussed

The main issues being discussed by the government include:

  • A review of the threshold level of 3,055 barrels which gives a 50 per cent rate reduction on duty
  • A review of the reduced rate for brewers that produce between 5,000 hectolitres (3,055 barrels) and 30,000 hectolitres (18,330 barrels)

The effect on brewers not receiving a reduced rate

Brewers producing 5,000 hectolitres or less of beer annually may qualify for a reduced rate of half the main duty rate. Brewers producing between 5,000 and 30,000 hectolitres a year may qualify for a reduced rate of beer duty calculated according to their level of production.

Copies of an evaluation document entitled Small Breweries' Relief - A Call For Evidence can be found on the Customs & Excise website at http://www.hmce.gov.uk/business/othertaxes/alcohol.htm.

Related topics: Beer

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