UK Alcohol Duty Reform: Relief Totals Tell Only Part of the Story

Analysis

The UK Government’s evaluation of the August 2023 alcohol duty reforms finds evidence of product reformulation and valued financial support, while wider benefits for business growth and public health remain less certain. Published by HMRC and HM Treasury on 28 October 2026, it provides an opportunity to examine how the system is working in practice.¹

The publication also coincided with the UK Government’s announcement of a further duty increase and more generous Small Producer Relief from February 2027. For businesses planning their next year, understanding the relationship between those changes will matter as much as the headline relief figures.⁴

Relief totals and additional support

The evaluation records approximately £209 million in Small Producer Relief between August 2023 and March 2026. Small brewers received around 98% of monthly relief. However, the scheme replaced Small Brewers Relief, so the total cannot be treated as entirely new support.¹

That distinction matters when assessing what reform has delivered. A business can receive a substantial discount against the standard duty rate while experiencing little improvement compared with its previous position. Establishing the additional benefit requires a comparable assessment of liabilities under both systems, allowing for changes in production and product strength.

The distribution also needs context. Small Producer Relief is restricted to products below 8.5% alcohol by volume (ABV), and the eligible brewer population is substantially larger than those of other categories.¹

Its concentration in brewing therefore raises a policy question about the scheme’s reach. Any proposal to broaden eligibility would also need to explain how it fits the public health purpose of strength-based taxation.

Where the benefit reaches businesses

The accompanying producer research offers a more detailed picture of business experience. IFF Research, commissioned by HMRC, interviewed 60 producers. Some reported improved profitability; others said wider costs had a greater influence on performance. Some producers, particularly those making higher-strength products, also reported higher duty liabilities, reduced profitability and constraints on growth. Small Producer Relief was widely valued, while producers with substantial draught sales described Draught Relief as useful but often modest beside other pressures.²

The research also found that some savings from the revised rates structure, excluding Small Producer Relief and Draught Relief, were retained within businesses rather than passed directly to consumers. These findings describe participants’ experiences and are not statistically representative of the whole industry.²

Retaining savings can protect a business’s ability to trade, employ people and invest. Assessing the value of relief therefore requires attention to margins and resilience alongside consumer prices.

Product changes deserve similar scrutiny. The evaluation identifies reformulation towards lower strengths, particularly beer clustering around 3.4% ABV, just below the 3.5% duty-band boundary.¹

For consumers, an additional lower-strength option and a familiar product changing its recipe are different experiences. Tracking both would give a fuller account of how choice is developing.

What February’s changes mean in practice

The UK Government plans to increase alcohol duty rates by 4.55% on 1 February 2027, describing this as maintaining their real-terms value. It will also make Small Producer Relief more generous, including a revised taper for products below 3.5% ABV. These future measures are separate from the reforms assessed in the evaluation.⁴

Using HMRC’s current and announced rates, our calculations illustrate the effect on two products outside Small Producer Relief.^3,4

These calculations multiply bottle volume in litres by ABV as a fraction and the applicable rate per litre of pure alcohol. The current rates used are £30.62 for the wine and £33.99 for the spirits; the announced rates are £32.01 and £35.54 respectively. Volume and strength are held constant. The examples illustrate duty liabilities, rather than forecast changes in shop prices.^3,4

Eligible small producers will need to assess the combined effect of higher rates and revised discounts. A more generous relief does not, by itself, establish whether an individual business’s final bill will fall.

Our view: judge reform by its practical effect

Alcohol.co.uk supports the strength-based principle and targeted help for smaller producers and licensed venues. The evaluation provides useful evidence for improving that framework.

Our assessment is that the next stage should focus on what businesses gain after the full calculation: duty payable, relief received, compliance costs and the capacity to invest. Regular comparisons by product category and producer size would help distinguish immediate financial support from lasting improvements in competitiveness.

We would also give proper weight to resilience. The evaluation does not establish that Draught Relief improved wider on-trade performance, but it cannot show what would have happened without it. Nor can longer-term health outcomes yet provide a settled verdict.¹

For the UK Government, the task is to build on the useful parts of reform and examine where its mechanisms have limited reach. For the industry, the responsibility is to explain clearly how proposed changes would support viable businesses while respecting the public health objectives of alcohol taxation.

Primary sources

Contains public sector information licensed under the Open Government Licence v3.0.