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Taxes on draft beer and prosecco will be reduced after the Chancellor announced sweeping changes to alcohol duties that reward weaker drinks.

Announcing the decision, Rishi Sunak, who is abstinent, said Britain’s 380-year-old alcohol tax system was “outdated, complex and full of historical anomalies”.

Sunak’s five-point plan, which takes effect in 2023, will simplify tax brackets at an overall cost to the Treasury of £ 555million by 2027. The plans will reduce the cost of a range of drinks but will increase the duties levied on wine with alcohol content above 11%, such as high-grade and fortified ciders such as port and Buckfast.

The Chancellor said the plans represented the biggest overhaul of alcohol taxes in 140 years and said the changes were made possible by the UK’s exit from the EU.

Pub company stock prices surged after the announcement, with JD Wetherspoon gaining 5.3, Mitchells & Butlers 5.7% and City Pub Group 1.2%.

Sunak’s alcohol tax overhaul rewards softer drinks, pubs that sell draft beer and cider, and English wine producers, who place more emphasis on low-ABV wines and wines sparkling wine such as prosecco.

Highlighting the government’s response to a consultation on alcohol taxes, which found these drinks were “no longer the preserve of the rich”, Sunak said the move would help English wine growers, many of whom make wine. sparkling thanks to the similarity of the topography. from the south of England with French Champagne.

In a separate measure he said it would help pubs struggling due to the effect of the pandemic, the chancellor announced ‘drafts relief’, reducing the tax on drinks served by 5% at the pump, like beer and cider. The tariff reduction will reduce the cost of a pint by 3p, or up to 25p for beer below 3.5% ABV.

In the short term, an alcohol tax increase that was supposed to go into effect at midnight on Wednesday will be rolled back, at a cost of £ 3 billion.

But the most important change in its five-part plan for alcohol taxes involves, according to Sunak, a “radical simplification”, under which the number of brackets in which different duties are levied will be reduced from 15 to six. .

Drinks will be taxed based on the amount of alcohol they contain, a move the Chancellor said is meant to encourage healthier choices.

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This means that a 9.5% bottle of wine would cost 47p less, including VAT, while an 11% bottle would increase by 12p, a 15% bottle would cost 81p more, and a bottle of port at 20% would cost £ 1.09 more. .

Low-grade ciders will cost up to 2 pence less in pubs and shops, while taxes on 2.5-liter bottles of high-grade cider will increase to 45 pence.

Andrew Carter, managing director of Kent-based sparkling wine specialist Chapel Down, said: pandemic.

“The English wine industry – comprising 3,800 acres of vineyards, 800 vineyards, 178 wineries – is growing rapidly and government support provides the opportunity to develop English wine globally.”

The British Beer and Pub Association (BBPA) has welcomed the immediate freeze on alcohol taxes, as well as the “draft relief” due to come into effect in 2023.

“This is great news for our local pubs and recognizes the crucial role they play in our economy and our society,” said BBPA Executive Director Emma McClarkin.

But the trade body for small brewers, the Society of Independent Brewers (SIBA), stressed that the reduction only applied to products sold in containers of 40 liters or more, meaning that craft brewers, who generally sell their product in 30 liter barrels, will lose out to the big brewing companies.

“By changing this threshold below 20 liters, the Treasury can ensure that all independent breweries benefit from this welcome new tax break on draft beer,” said SIBA chief executive James Calder.

Small brewers are already enjoying tax relief, a measure introduced when Gordon Brown was chancellor and credited with sparking a craft beer revolution.

The Treasury consults on possible changes to the regime.

Sunak also announced “Small Producer Relief” which would expand the relief to include cider houses that produce beverages with less than 8.5% strength.

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