Alcohol Duty Calculator 2025/26

The 2023 Alcohol Duty Reform

The UK's alcohol duty system was fundamentally reformed in August 2023. Before the change, different alcoholic product categories attracted different flat rates with little relationship to the actual alcohol content. A bottle of wine at 12% ABV paid the same duty as one at 14.5% ABV. Beer was taxed by hectolitre percentage, spirits by litre of pure alcohol, and wine and cider by volume regardless of strength. This created anomalies and incentives that did not align with public health or simplicity objectives.

The new system replaced all previous rates with a single principle: duty is proportional to alcohol content. Every product is now assessed on litres of pure alcohol (LPA), calculated as volume multiplied by ABV divided by 100. A standard rate of £28.50 per LPA applies to most products above 3.5% ABV. A lower rate of £9.27 per LPA applies to products at or below 3.5% ABV, creating an incentive for producers to develop lower-strength alternatives.

Sparkling wine was previously subject to a higher rate than still wine. This premium was abolished, meaning sparkling wine now attracts the same ABV-proportionate rate as still wine. This change benefited UK sparkling wine producers, including those in the growing English wine sector.

Draught Relief Explained

Draught relief is a specific relief available for qualifying draught products. It reduces the applicable duty rate by £2.28 per LPA compared to the standard rate, taking the effective rate from £28.50 to £26.22 per LPA. To qualify, the product must be served from containers of at least 20 litres at VAT-registered premises with a designated premises supervisor.

This relief is designed to support the on-trade (pubs, bars, and restaurants) by making draught products cheaper to produce or import compared to packaged equivalents. From a practical standpoint, a pub selling draught beer saves approximately 9.2p per unit of alcohol served compared to an equivalent packaged product at the same ABV.

For a typical 4% ABV pint (568ml), the LPA is 0.568 × 0.04 = 0.02272 LPA. At the standard rate of £28.50, duty is 64.8p per pint. With draught relief at £26.22, duty falls to 59.6p per pint — a saving of around 5.2p per pint. This saving accumulates significantly for high-volume venues.

How Small Producer Relief Works

Small producer relief provides reduced duty rates to producers making fewer than 4,500 hectolitres of pure alcohol per year. The smallest producers can receive duty rates up to 50% lower than the standard rate. The relief tapers as production increases toward the 4,500 hectolitre threshold.

Small producer relief replaced the previous small brewers relief system and extended the principle to wine, cider, and spirits producers. It is intended to support craft producers and new market entrants who cannot benefit from economies of scale available to large producers.

Producers must register with HMRC and apply for the relief. The calculation of qualifying production uses the same LPA basis as the main duty system. Producers exceeding the threshold are subject to standard rates on all output in the relevant period.

Duty on Spirits

Spirits are taxed at the same standard rate of £28.50 per LPA. For a standard 70cl bottle of gin, whisky, or vodka at 40% ABV, the LPA is 0.7 × 0.4 = 0.28. Duty is therefore 0.28 × £28.50 = £7.98. VAT is then charged at 20% on the retail price, so a bottle retailing at £25 would carry approximately £4.17 in VAT, making total tax (duty plus VAT) around £12.15.

Spirits at higher ABVs attract proportionately higher duty. A cask-strength whisky at 60% ABV in a 70cl bottle would carry LPA of 0.42 and duty of £11.97 per bottle — 50% higher than the standard 40% ABV product due entirely to the higher alcohol content.