Chancellor Rachel Reeves has confirmed a significant increase in alcohol duty as part of the UK government's latest Budget, a move that will directly raise the price of beer, wine, and spirits for consumers.
What the Budget Means for Your Drink
In her Budget speech delivered on 26 November 2025, the Chancellor announced that alcohol duty will rise in line with inflation. The increase is pegged to the Retail Price Index (RPI) from September, which stood at 4.5%.
This tax is an excise duty paid by producers and importers, calculated based on the strength (ABV) and category of the alcohol. The change will affect the cost of drinks purchased in supermarkets, pubs, bars, and restaurants across the country.
The Financial Impact of Alcohol Duty
The duty on alcohol is a major contributor to the UK Treasury. For the 2025-26 financial year, it is forecast to raise approximately £13 billion. This substantial sum represents about 1.1% of all government receipts, equating to roughly £450 per household and 0.4% of the national income.
Despite these large nominal figures, the proportion of total government revenue from alcohol duty has been on a long-term decline, falling from around 1.8% in 1999/00 to 1.5% in 2018/19.
How the UK Compares on Alcohol Tax
A 2025 comparison of excise rates across the EU and UK reveals that the UK has one of the highest overall tax burdens on alcohol, ranking third highest behind only Finland and Ireland.
The analysis shows that for a 330ml bottle of 5% ABV beer, the UK tax is approximately €0.4187, making it the second-highest in the EU/UK ranking for that specific product.
The situation is similarly stark for wine. The UK applies a significant duty, whereas many European wine-producing nations do not. In fact, 15 EU member states impose zero duty on wine, with others charging minimal amounts. By contrast, the average bottle of wine in the UK incurs around £2.35 in excise duty.
The UK's alcohol duty system, reformed in August 2023, sets rates per litre of pure alcohol. It features different bands for beer, cider, spirits, wine, and other fermented products, with a specific, lower rate for draught products served in pubs. The excise duty ranges from nothing for drinks below 1.2% ABV, up to £32.79 per litre of pure alcohol for drinks stronger than 22% ABV.
