Exclusive: Spirits set for double digit tax rise as industry faces largest tax rise since 1643

Distillers have warned that they’re being squeezed to the bone following the government’s decision to scrap the alcohol duty freeze.

With massive increases in the cost of living, a tax increase of almost 16 per cent is set to hit consumers in the pocket just before Christmas.

New industry analysis shows that the potential hike, which would be the highest since excise duty was introduced in 1643, will leave small distillers in the UK with around £3.50 from an average bottle of spirits to invest, pay suppliers, support jobs and cover all the other costs associated with running a business.

The duty freeze was one of many policies consigned to a bonfire of tax cuts from Chancellor Jeremy Hunt, after taking the reins from his predecessor Kwasi Kwarteng.

According to the British Beer and Pub Association (BBPA), the freeze would have delivered a £300m saving to the pub industry.

With huge cost increases from the rising price of energy and suppliers, small businesses across the country are fearful for the future of some of the iconic products they produce.

Spirits make up around a third of alcohol sales in pubs and restaurants, and an RPI rise in excise duty would hurt iconic pubs across the country.

“We are already being hugely squeezed by suppliers and facing increased costs on glass and other raw materials,” Director of Batch Distillery in Burnley Phil Whitwell said.

“The news of a freeze in duty allowed us to breathe a real sigh of relief, but the truth is, if we face such a huge increase in excise duty, this could be the final nail in the coffin for distillers like us.”

A spokesperson for the UK Spirits Alliance said a record excise duty increase would be a shattering blow to small distillers across the country.

“Many distillers will be left with just under 20 per cent of the cost of a bottle to pay for all of the rising bills associated with running a business, and this will be felt by consumers across the UK who enjoy premium products,” they said.