Chancellor John Healey has raised alcohol duty in line with Retail Prices Index (RPI) inflation, adding 2p to the cost of a pint of beer and between 10p and 12p to a bottle of wine.
The increase follows RPI inflation, currently set at 3.9%. This has taken the duty on a pint from 50p to 52p, while the rise has added between 10p and 12p to the price of a bottle of wine.
Government revenue from alcohol duty
The Government collected £12.4 billion from alcohol duty during the 2025/26 financial year, representing 1.3% of all revenues taken by HMRC. The highest collected was £13.2 billion in the 2021/22 financial year, but receipts have not exceeded £12.5 billion since then.
While the tax is paid by producers and importers, the increases are passed down the supply chain to consumers. Most pubs and bars set their own prices, covering wages, energy and rent, so may choose to increase costs of booze by more than 2p to handle wider pressures.
Relief for brewers and industry reaction
Mr Healey sought to soften the blow by handing a £10 million boost to alcohol duty relief. This will benefit over 2,000 British brewers.
The move has been welcomed by industry bosses but they are continuing to call on further support from the government. They have warned that more pubs, restaurants and bars could be forced to shut if costs continue to rise.
Emma McClarkin, chief executive of the British Beer and Pub Association, previously said: "At a time when young people are finding it really tough to find work, supporting the beer and pub sector would mean the Government are helping us create much-needed jobs."
"Our brewers are forced to pay some of the highest rates of beer duty in Europe, 12 times more than Germany and Spain. Freezing the tax at its current rate, rather than the current planned increase, will start to bring our brewers closer in line with our European counterparts."
Warnings from the drinks sector
Miles Beale, chief executive of the Wine and Spirit Trade Association, added: "With a cost of living crisis and an aim for growth in every postcode, this Government should be supporting not squeezing the British drinks sector."
"The Chancellor cannot control global fuel prices, but he can put the brakes on relentless and punishing alcohol tax increases, which have consistently failed to raise revenue."
Arjun Kumar, a finance specialist and co-founder of Taxd, said: "Using tax to shape behaviour is fine in principle but it feels like it’s moved beyond principle and into a cash grab aimed at the weekly shop."
"In a cost of living crisis, duty rises are a painful part of the Budget people feel at the till and they feel it fast. An RPI rise puts roughly 2p on a pint and about 35p on a bottle of gin. It may sound like a small number but it's crash landing on the same households up and down the country already dealing with frozen thresholds."
"If the Chancellor wants tax to change behaviour, the real prize lives on the other side. Business Asset Disposal Relief and the venture capital schemes are the levers that decide whether someone builds a company in the UK or takes their talent elsewhere. Smart money protects entrepreneurs and the value they create far more than another penny on a pint is worth collecting."
