Thank you for contacting me about pubs, beer duty, business rates and VAT.
Thank you for sharing your suggestions on beer and alcohol duty, business rates, and VAT. I understand that the Government keeps all taxes under review and careful consideration will be given to any proposed amendments to our tax regime.
On 19 December, the Government announced that Alcohol Duty rates will be frozen by a further six months from February, until August 2023. Any changes to the rates will be announced as part of the Chancellor's budget statement on 15 March 2023. If any changes are announced at the Budget, they will take take effect from 1 August 2023. This has been done to align any changes to duty rates with the implementation dates for the alcohol duty system.
The simplification of the duty system, which will take effect from 1 August 2023, will reduce the number of main rates from 15 to 6, and tax products in proportion to their alcohol content.
All tax categories, such as beer and wine, will be moved to a standardised set of bands, with rates for products between 1.2-3.4 per cent alcohol by volume (ABV), 3.5-8.4 per cent ABV, 8.5-22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories will pay the same rate of duty if they have the same proportion of alcohol content. Registration and payment will also be simplified, and the practice where individual products have different administrative rules will end.
The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change will address the problem of harmful high-strength products being sold too cheaply, and the new rates for low strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.
I welcome the introduction of a new small producer relief which will build on the previous success of the Small Brewers Relief, which will benefit cidermakers and other producers of lower ABV drinks. This will allow small producers to diversify their product range to other products below 8.5 per cent ABV while still benefitting from reduced rates.
From 1 April 2023, business rate bills in England will be updated to reflect changes in property values since the last revaluation in 2017. A package of targeted support worth £13.6 billion over the next five years will support businesses as they transition to their new bills, protect businesses from the full impact of inflation, and support our high streets. English Local Authorities will be fully compensated for the loss of income as a result of these business rates measures and will receive new burdens funding for administrative and IT costs.
I am not aware of any plans to permanently reduce the rate of VAT on all food and drink. I have spoken to colleagues at the Treasury who have made it clear that the temporary reduction to VAT was intended as a measure to support the industry during the coronavirus pandemic. To extend this reduction indefinitely would limit funding long-term for the vital public services which have served us so well in this time of national crisis.
Thank you again for taking the time to contact me.
Craig Whittaker MP