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Budget: Chancellor freezes all alcohol duty

Published:  03 March, 2021

Duty on wines, spirits and beers is to be frozen, Chancellor Rishi Sunak announced in today’s Budget. 

He said: “This is a tough time for hospitality so I can confirm that the planned increases in duty for spirits, wine, cider and beer will all be cancelled. All alcohol duty is frozen for the second year in a row and only the third time in two decades.” 

Welcoming the freeze, the WSTA said it would allow the hospitality industry to “recover, rebuild and replenish" revenues to the Treasury.

“The decision to freeze wine and spirit duty comes as a huge relief for British businesses, pubs, restaurants and its suppliers following the crushing – and continuing - closure of the hospitality sector, for months on end, during the pandemic,” said CEO Miles Beale. 

“Chancellor Rishi Sunak seems to ‘get it’. He understands that supporting our industry will allow it to recover, rebuild, create jobs and - in time – replenish revenues to the Treasury.  He has also shown he is in touch with men and women from all walks of life who want to enjoy their chosen tipple without getting stung by further tax hikes.”

The Chancellor also extended the reduction of VAT from 20% to 5% for the hospitality sector, due to end 31 March, by six months to 30 September, after which there will be a six month interim rate of 12.5%, not returning to the full 20% until April 2022.

However, this does not include alcohol, as called for by the WSTA. “It is disappointing that the Chancellor did not extend this to include alcoholic drinks, which would have given the trade a real boost when they are finally allowed to re-open their doors to the public,” said Beale.

Moreover, Sunak announced an extension of the 100% business rates holiday for shops, as well as restaurants, pubs and leisure facilities, until the end of June. 

For the remaining nine months of they year, business rates will still be discounted by two thirds, up to a value of £2m for businesses that have been able to stay open, with a lower cap for those that have been unable to stay open.

The Chancellor also used his Budget speech to confirm, as reported, that the Coronavirus Job Retention Support Scheme (CJRS), currently due to finish at the end of April, would be extended until the end of September. 

In addition, he confirmed the £5bn grant scheme announced ahead of the Budget to help high street businesses, which includes grants for hospitality sites ranging between £8,000 and £18,000, depending on their rateable value. 

He also delivered a £150m Community Ownership Fund so communities can bid for up to £250,000 to save pubs and sports clubs in danger of going out of business.

As part of the English roadmap for re-opening, premises will be allowed to offer table service outside from 12 April at the earliest, and a return to indoor service is proposed for 17 May, but with groups limited to six people or two households.