Alcohol duties

How much does it raise?

How does it work?

Since August 2023 every alcoholic drink has been taxed on one principle: the litres of pure alcohol it contains. A stronger drink pays more duty per litre of liquid, in a straight line. Before that, beer, cider, wine and spirits were taxed on four different bases that had grown up separately over centuries.

Draught relief gives a lower rate to drinks below 8.5% ABV sold on draught in pubs, a deliberate attempt to favour the pub over the supermarket.

VAT is then charged on the price including duty, so as with fuel there is tax on the tax.

How has it changed?

How it got here, and why each change was made:

• 1643Excise duty on beer is introduced by Parliament to fund the Civil War, and never removed.
• 1751The Gin Act raises duty sharply to curb the gin craze, one of the earliest uses of a tax explicitly to change drinking behaviour.
• 2008An alcohol duty escalator raises rates 2% above inflation each year.
• 2013The escalator is scrapped for beer after a campaign by pubs and brewers.
• 2023The system is rebuilt around alcohol content, with draught relief for pubs.

Where does the money go?

Nowhere in particular. Alcohol duty is not earmarked. It goes into the Consolidated Fund and is spent on whatever the government of the day decides.

Because it is not earmarked, the only honest way to show what it pays for is by proportion. If alcohol duties receipts of £12.4bn were spent in the same proportions as all public spending in 2025-26, they would break down like this. It is an illustration of scale, not a statement about where those particular pounds went.

See for every £100 of tax for the full picture.

Is it different where I live?

Scotland

Duty is reserved to Westminster, but Scotland introduced minimum unit pricing in 2018, which sets a floor price per unit. That is not a tax: the extra money goes to retailers, not the government.

Does it change what people do?

Alcohol duty is one of the better-evidenced behavioural taxes. Consumption does respond to price, though less than proportionately, and the response is larger among the heaviest drinkers than was once assumed. Real-terms duty has fallen over the last decade, and consumption has fallen too, which shows price is not the only thing driving the trend.

When a tax rise stops raising money looks at the cases where the effect has been large enough to move the revenue.

How does that compare with other countries?

In 2024 the UK raised 1.6% of GDP this way: seventh of the 12 countries compared here.

What are the arguments?

Both columns are set out as their strongest case, not as a preferred answer and a strawman. See how this site handles contested questions.