Chancellor Rachel Reeves has revealed the upcoming increase in alcohol prices for consumers at various establishments in the coming year as part of the current Budget announcement. Alcohol tax in the UK, an excise duty paid by producers and importers, is determined by the alcohol’s strength (ABV) and category.
During her Budget speech, Rachel Reeves disclosed that alcohol duty will climb in alignment with inflation, which is typically based on the Retail Price Index. The increase is set to match the 4.5% RPI from September, with the adjustment scheduled for February 1, 2026, to maintain the duty’s real value.
Reeves emphasized that the decision to raise alcohol duty was made after considering input from stakeholders advocating for a duty cut, freeze, or above-inflation increases. The move aims to balance the contributions of alcohol producers and the hospitality sector to the UK’s cultural and economic landscape while acknowledging the duty’s role in mitigating alcohol-related harm.
Industry leaders had urged the Government to freeze duty in this year’s Budget, citing the impact of previous tax hikes and the additional burden of the new glass tax. Official data shows that alcohol prices have already surged by 5.8% compared to the previous year.
Last year saw a 3.6% increase in alcohol duty, translating to a 54p hike on wine and a 32p raise on gin, while draught duty saw a 1.7% reduction, equivalent to a penny off a pint, during the 2024 Budget. Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), expressed concerns over the continuous tax increases impacting businesses in the sector.
The UK Spirits Alliance spokesman, Karl Mason, lamented the detrimental effects of the duty increase on distillers, pubs, and the broader hospitality industry. The decision to raise alcohol duty was criticized for its potential negative impact on businesses and consumers, as well as hindering economic growth and job creation.
Conversely, the Alcohol Health Alliance (AHA) welcomed the Chancellor’s decision to align alcohol duty with inflation in the Autumn Budget, emphasizing the importance of maintaining duty to address public health concerns related to alcohol consumption.
Alcohol duty plays a significant role in the UK economy, with forecasts indicating a contribution of around £13 billion for the financial year 2025-26. When compared to other EU countries, the UK ranks among the highest in excise rates for beer, wine, and spirits.
Overall, the adjustment to alcohol duty in line with inflation will result in higher prices for consumers at pubs and shops.