Chancellor Rachel Reeves has revealed the upcoming increase in alcohol prices across shops, bars, pubs, and restaurants in the forthcoming year. This announcement was made during today’s Budget speech. In the UK, alcohol tax, an excise duty paid by producers and importers, is determined by the alcohol’s strength (ABV) and category.
During her Budget speech, Rachel Reeves declared that alcohol duty would climb in line with inflation, following the Retail Price Index from September, which stood at 4.5% this year. The alcohol duty will be adjusted with the RPI on February 1, 2026, to maintain its current real value.
Reeves emphasized that the decision to raise alcohol duty considered various viewpoints, including proposals for a duty reduction or freeze versus above-inflation increases. She highlighted the need to balance the contributions of alcohol producers and the hospitality sector to the UK’s culture and economy with the duty’s role in mitigating alcohol-related harm.
Industry leaders had advocated for a duty freeze in this year’s Budget, citing the impact of previous tax hikes and the newly imposed glass tax. Official data indicates that alcohol prices have already increased by 5.8% compared to last year.
In the previous year, alcohol duty saw a 3.6% rise, leading to a 54p increase for a bottle of wine and 32p for gin, while draft duty was reduced by 1.7%, equivalent to a penny off a pint, in the 2024 Budget. This move was met with criticism by Miles Beale, the chief executive of the Wine and Spirit Trade Association (WSTA), who referred to the Budget as a series of detrimental cuts for the industry.
The UK Spirits Alliance spokesperson Karl Mason expressed disappointment in the Budget’s impact on distillers, pubs, and the wider hospitality sector, emphasizing the potential negative consequences on businesses and jobs. He highlighted concerns about the continued duty increases affecting the industry’s sustainability and affordability for consumers.
However, the Alcohol Health Alliance (AHA) supported the Chancellor’s decision, viewing it as a step towards a more responsible approach to alcohol taxation. The AHA chairman, Professor Sir Ian Gilmore, emphasized the importance of maintaining alcohol duty in real terms to address public health concerns and promote responsible alcohol consumption.
Alcohol duty plays a significant role in the UK economy, projected to generate around £13 billion in the financial year 2025-26. Comparing EU and UK excise rates, the UK ranks among the top three highest, particularly for beer and wine duties, with notable variations compared to other EU countries.
In conclusion, the adjustment of alcohol duty to align with inflation will result in increased prices for consumers in pubs and retail outlets.
