Why Cut Beer Tax
The simple answer; British beer is overtaxed.
Beer Duty (tax) in Britain is three times the EU average. The government collects £3.5 billion every year in Beer Duty, as well as almost £10 billion in other taxes on pubs and brewers. Today one in every three pounds spent in pubs goes to the taxman.
Along with Business rates and VAT, Beer Duty is putting pubs under enormous pressure; every day pubs are closing their doors for good.
And it’s about to get worse.
The industry needs a cut in Beer Duty, but the government is planning an increase. Beer Duty is now linked to RPI and that means it’s likely that Beer Duty will increase by at least 3% at the next Budget and every year for the foreseeable future.
The last time Beer Duty increased year on year was between 2008 and 2013 when the government put a Beer Duty escalator in place. The impact on the beer and pub sector was catastrophic, within 5 years there was a 24% decline in beer sales, 5,000 pubs closed and 58,000 people lost their jobs.
So now we need to fight.
Our pubs are a British success story. They have been at the heart of British culture for generations and remain one of our most valuable assets. The pubs and brewing industries combined create jobs, encourage tourism, and most importantly provide a vital place for communities to gather.
The Pressure Our Pubs Face
Despite serving the country for generations, our pubs are under threat from a range of pressures, and right now they are closing at a rate of 3 per day.
One of the biggest pressures pubs face is a growing tax burden, with 1 in every 3 pounds spent in pubs going straight to the taxman. This is simply not sustainable.
The three main taxes pubs face are Beer Duty, Business Rates and VAT.
Beer duty is a tax paid when producing and selling beer, and is calculated based on the strength of the alcohol. Beer duty has increased by 60% over the last 17 years and now the UK has one of the highest rates of duty in Europe. With seven in every ten alcoholic drinks served in pubs being a beer, Beer Duty increases have a big impact on pubs and it’s set to rise every year for the foreseeable future; as it is linked to the Retail Price Index (RPI) which all but guarantees annual increases.
Business rates are taxes paid on non-residential properties like shops, offices, factories, and pubs. Rates are generally calculated based on a property’s rental value, usually on a square footage basis. However for pubs it is a calculation based on ‘fair maintainable trade’ as determined by an independent assessor.
The way the business rates system works has a disproportionate impact on pubs compared to other types of business (e.g. on-line businesses), the average pub today pays a business rates bill of £15,000 meaning around 4% of it’s turnover is paid in Business Rates alone.
Following recognition of the unfair burden faced by pubs, a new pub-specific relief for smaller pubs was introduced in 2017 in the form of £1,000 of their annual tax bill, but this is set to end in March 2019, further increasing the pressure.
VAT is a tax which is added to most goods in the UK and has a flat rate of 20%. Pubs, along with other licensed venues such as restaurants and bars, have to pay VAT on all food and drink they sell. This is not consistent with other food outlets, as food sold through supermarkets, convenience stores and takeaways (including cafes) does not pay VAT on most food products.
The people of Britain pay some of the highest Beer Duty rates in Europe. In fact, Beer Duty in Britain is three times higher than the EU average and 12 times higher than some individual countries. This has been the result of decades of creeping increases, and now we stand apart from the majority of nations in the world, noteable for the high tariffs we put on alcohol. The result of this disproportionate rate is that British people pay 40% of the Beer Duty in Europe, whilst drinking only 12% of the beer.
On a 5% pint of beer:
- Finland pays the most Beer Duty in Europe at 81 pence
- The UK pays the 3rd most at 54 pence
- Italy pay around the average at 18 pence
- Germany only pays 5 pence – the 26th lowest in Europe
Other leading brewing nations like, Germany and Belgium have worked to protect their industries and have far lower Beer duties than the UK. Similarly, other countries have invested in the pub, brewing and wider hospitality sectors by reducing various taxes to ensure the industries thrive.
Pubs closing down mean we lose vital public spaces, which means less opportunities for people to enjoy social interaction, the company of others and embrace their local communities.
Fewer pubs would even lead to a drop in tourism; visiting a British pub is regularly listed in the top 3 highlights of tourists when visiting the UK.
A British Institution
Pubs have been a constant in British life for generations, and are now one of the few remaining truly open public spaces. They have been at the heart of our communities since they first opened their doors, and even their name, pub, is shorthand for 'public house'.
They have deservedly earned a reputation as a British institution, both in what they offer us, the pub goers, and what they do for Britain as a whole. As an industry, British beer and pubs are a success story to be proud of. Combined, they contribute £23bn towards UK GDP every year and support over 900,000 jobs. 44% of those jobs are held by 16-24 year olds, which means they continue to provide vital job opportunities for young people.
They do this by providing something of undeniable value to the people of Britain and all those who visit our shores. They are far more than just a place to go for a pint. They are a space where class divides, generational differences and geographical rivalries melt away. They are the home of the beer garden. For every Michelin starred gastropub pushing the boundaries of British cooking, there’s a curry club or pie of the week. They are the home of sport, where else would you rather be if you can’t be at the game? Countless bands and singers have taken their first musical steps in backroom bars and weekly open mic nights. They are the constant hosts of birthdays, weddings, wakes, weekly catch ups, send offs & reunions.
But also, they are a great place to have a pint, and catch up with family, friends and other locals.
Data source: BBPA
Half of tourists
to the UK
visit a pub
Beer duty is x12
that of Spain
in pubs are
16-24 year olds
One in four of us
fall in love
in a pub
82% of beer
sold in the UK
was brewed here
One in Three pounds
spent in a pub
goes to the taxman