Craft brewers call for tax relief to take on mainstream

By Nicholas Robinson contact

- Last updated on GMT

Smooth curve: SIBA calls on Government for tax changes
Smooth curve: SIBA calls on Government for tax changes

Related tags: Craft beer

Independent brewers across the UK are calling for drastic tax changes in tomorrow’s (11 March) Budget to allow the sector to take a bigger share of the beer market.

Just 7% of the 8bn pints drunk in the UK are from small independent craft brewers, said Society of Independent Brewers (SIBA) chief executive James Calder, who has urged Chancellor Rishi Sunak help indies by changing the progressive beer duty (PBD) introduced in 2002.

Mainstream and global brewers, on the other hand, produce 90% of the beer drunk in the UK, which smaller businesses can’t compete with due to the tax rules.

Current PBD rules mean brewers producing up to 5,000hl of beer a year, or around 900,000 pints, can’t easily increase production as their tax bill would “rocket overnight”, rather than smoothly rise.

The squeezed middle

“The rate at which beer tax increases above 5,000hl isn’t a smooth curve and, as such, a ‘squeezed middle’ has emerged, where breweries would see their tax bill rocket overnight if they continue to grow,” said Calder.

“This can’t be right. This is now holding back the sector and acts as a significant barrier to growth.

“By smoothing out the curve of beer tax as a brewery grows, making it fairer, it would mean that more breweries can have the confidence to invest in their people, equipment and beers,” he continued.

“This would equate to an estimated £10m of investment in the economy and create around 750 new jobs in the craft beer industry.”

Such a move, Calder admitted, would likely cost the Chancellor £9m, but claimed the long-term benefits to the economy and business would eventually outweigh that, with costs being offset as the craft beer sector grows.

“But protecting the duty relief we have now is also vital,” he continued. “If the Chancellor were to cut the relief given to the UK’s small brewers below 5,000hl, it would directly threaten around 250 small independent breweries.”

The red wall

Calder added: “Some 40% of our members are based in the ‘red wall’ of the Midlands, north-east and north-west.

“If the Chancellor wants to give our beer industry a further boost, he could also go further and give the industry certainty over its tax bill.

“While the Government has, in recent years, frozen beer duty, it still remains one of the highest in Europe. Germany pays only 5p [in duty] for a pint of 5.4% beer compared to 54p in the UK.

“By announcing a freeze for the next four years, for the duration of the next parliament, the Government could boost the confidence of the sector.”

Related topics: Beer

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