Alcohol duty

The impact of the changes on retail prices on or after 28 March 2011 for typical alcoholic drinks is equivalent to:

  • 54p on a bottle of spirits
  • 4p on a pint of beer
  • 15p on a bottle of wine.

The Finance Bill 2011 will introduce legislation for a new duty on beers exceeding 7.5% abv that are produced in, or imported into, the UK. The new duty is to be levied in addition to the existing general duty on beer.

The legislation will also change the taxation of low strength beers by introducing a reduced rate of general beer duty at or below 2.8% abv and above 1.2%. Small Brewery Beer relief will still be available on general beer duty payable on beers above 7.5% abv but it will not apply to the new high strength beer duty. The relief will also not apply to beers at or below 2.8% abv qualifying for the new reduced rate.

Tobacco products duty

From 23 March 2011 the duty rates for tobacco products are increased by 2% above RPI. Duty on hand rolling tobacco will increase by an additional 10%. The Government is also restructuring cigarette duty to support health objectives. As a result, ad valorem duty on cigarettes will decrease to 16.5%, and specific duty will increase by 25% above the RPI. This will target the duty increase on cheaper cigarettes, adding 50p to a packet of economy cigarettes and 33p to a packet of premium cigarettes. These changes came into effect on 23 March 2011.

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