Delivering his first Budget today (Wednesday 28 October), Healey said the measure would support smaller drinks producers alongside wider tax cuts for high street businesses.
He said: “For those who feel like celebrating tax cuts for our high streets, I’m providing a £10m alcohol duty relief for around 2,000 small British brewers and British cider makers.”
The Treasury confirmed the £10m package would be provided annually through changes to Small Producer Relief, benefiting more than 2,000 small alcohol producers across the UK.
Under the changes, products below 3.5% ABV will receive a more generous discount, while the marginal discount for products between 3.5% and 8.4% ABV will increase by Retail Prices Index (RPI) inflation plus an additional 10% from 1 February 2027.
Wider alcohol duty increase confirmed
However, the Budget documents also confirmed alcohol duty rates would rise in line with retail price index (RPI) inflation from 1 February 2027.
The announcement follows reports ahead of the Budget that alcohol duty could rise by 3.9%, potentially adding around 2p to the duty on a pint of beer.
The British Beer & Pub Association (BBPA) had called on the Government to freeze beer duty and increase the draught duty discount, warning UK brewers already face some of the highest beer duty rates in Europe.
BBPA chief executive Emma McClarkin previously said freezing duty and increasing draught relief would mean “more affordable pints, greater investment, and more jobs”.
UKHospitality chief executive Allen Simpson also warned that increases to headline beer duty risk adding further pressure through higher drinks prices, despite duty not being paid directly by pub operators.
Industry reaction
Society of Independent Brewers and Associates (SIBA) chief executive Andy Slee welcomed the announcements, saying they would help independent brewers invest in their businesses and improve access to pubs.
He said: “Fans of indie beer will be toasting the Chancellor’s big pledge for small breweries tonight as he delivers on expanding access to pubs and improves the generosity of Small Producer Relief.”
Slee said independent brewers were currently unable to sell to around 62% of pubs in their local communities because of restricted market access, despite 80% of beer drinkers wanting to see local beers on the bar.
He added: “This new right to a guest beer and the extra relief support will hopefully supercharge this revolution, helping them to grow and thrive.”
Slee also welcomed the changes to relief for lower-strength beers, which he said would help smaller brewers compete in the growing market for these products.
Wine and Spirit Trade Association (WSTA) chief executive Miles Beale criticised the decision to increase alcohol duty in line with inflation.
He said: “No-one will be toasting yet another RPI increase on top of rising inflation. Instead of providing breathing space in a cost of living crisis the Chancellor’s alcohol tax hikes will further stifle British business and serve up nothing for consumers.”
Beale argued increasing alcohol duty was failing to boost Treasury revenues while contributing to business closures and higher prices for consumers.
He urged the Government to stop increasing duty and listen to those affected, warning that the measures were placing further pressure on businesses and consumers across the country.
Guest beer provision
The Government also announced plans to introduce a “Guest Beer” provision in the Pubs Code in England and Wales.
The measure is intended to give tied tenants greater flexibility over the beers they stock, while helping smaller brewers access pubs and offering customers greater choice.
