Chancellor Rachel Reeves has revealed the upcoming increase in alcohol prices across various establishments like shops, bars, pubs, and restaurants in the forthcoming year. This announcement was made as part of today’s Budget. In the UK, alcohol tax, an excise duty paid by producers and importers, is determined based on the alcohol’s strength (ABV) and category.
During her Budget speech, Rachel Reeves declared that alcohol duty would escalate in alignment with inflation, which typically follows the Retail Price Index from September. This year, the RPI stood at 4.5%. The adjustment to alcohol duty with the RPI will take effect on February 1, 2026, to uphold its existing real-terms value.
Acknowledging various viewpoints from stakeholders, Rachel Reeves emphasized the decision’s balance between supporting alcohol producers and the hospitality sector’s vital role in the UK’s economy and culture, while also addressing alcohol-related harms.
Industry leaders had advocated for a duty freeze in this year’s Budget, citing the aftermath of previous tax hikes and the additional pressure from the new glass tax. Official data shows that alcohol prices have already risen by 5.8% compared to the previous year.
Last year, drinkers experienced a 3.6% uptick in alcohol duty, resulting in a 54p increase for a bottle of wine and 32p for gin, while draught duty saw a 1.7% reduction – equivalent to a penny off a pint – in the 2024 Budget. Miles Beale, the chief executive of the Wine and Spirit Trade Association (WSTA), expressed concerns about the cumulative impact of these duty increases on wine and spirit businesses.
On the other hand, the Alcohol Health Alliance (AHA) welcomed the Chancellor’s decision to align alcohol duty with inflation, emphasizing the importance of maintaining duty levels to protect public health. The UK’s Alcohol Duty is projected to generate approximately £13 billion in the fiscal year 2025-26, contributing significantly to government receipts and national income.
Comparatively, the UK’s excise rates for beer, wine, and spirits position the country as the third highest among EU and UK members, trailing behind countries like Finland and Ireland. The duty rates vary based on the type of drink and alcohol content, with rates set per litre of pure alcohol. This adjustment will lead to an increase in alcohol prices at pubs and shops as they align with inflation.
