UK to raise alcohol duties by 4.55% from February 2027

Inflation-linked increase

The UK government will increase all alcohol duty rates by 4.55% from 1 February 2027 following Budget 2026. The increase matches the Retail Price Index measure used for the policy and is intended to maintain the tax’s value in real terms. It also aligns with the Office for Budget Responsibility’s baseline assumption that alcohol duties rise with prices.¹

The changes affect the manufacture, distribution, storage, sale, import and consumption of alcoholic products. Simplified duty rates for alcohol brought into Great Britain for personal use will also rise.¹

New main duty rates

Alcoholic products below 3.5% ABV will be taxed at £10.41 per litre of pure alcohol. Still cider from 3.5% to below 8.5% ABV and sparkling cider from 3.5% to 5.5% ABV will carry a £10.86 rate. Beer from 3.5% to 8.5% ABV will be taxed at £23.61, while spirits, wine and other fermented products in the same strength band will be taxed at £27.82 per litre of pure alcohol.¹

Products between 8.5% and 22% ABV will be taxed at £32.01 per litre of pure alcohol, while the rate above 22% ABV will be £35.54.¹

Reduced rates for draught products

The reduced rate for qualifying draught alcohol below 3.5% ABV will be £8.97 per litre of pure alcohol. Draught still cider from 3.5% to 8.5% ABV will be taxed at £9.36. Draught beer, spirits, wine and other fermented products in that band will face a £20.34 rate, which will also apply to draught sparkling cider above 5.5% but below 8.5% ABV.¹

More generous Small Producer Relief

Small Producer Relief, or SPR, will become more valuable relative to the main duty rates. The government will introduce a more generous discount taper for products below 3.5% ABV. For products from 3.5% to 8.4% ABV, the marginal discount will rise by the Retail Price Index plus an additional 10%.¹

The relief is available to small and some medium-sized producers for drinks below 8.5% ABV, provided they are not made under licence and are produced at premises with annual output below 4,500 hectolitres of pure alcohol. Officials said the change is intended to support smaller producers while retaining the wider duty system and balancing the economic and cultural contribution of drinks and hospitality businesses against the role of taxation in reducing alcohol-related harm.¹

SPR was introduced on 1 August 2023 as part of wider alcohol duty reforms. It replaced the more limited Small Brewers Relief by extending duty discounts beyond brewers to all qualifying small producers of alcoholic products below 8.5% ABV.¹

Fiscal and consumer effects

The government said the inflation-linked duty increase creates no additional revenue relative to the OBR baseline because that uprating is already assumed in the forecast. The more generous SPR terms account for the package’s cost to the Exchequer, estimated at £10 million a year in every fiscal year from 2027–2028 through 2031–2032.¹

No significant macroeconomic effect is expected. The impact on households will be indirect and will depend on whether producers, importers, wholesalers and retailers pass the additional duty into prices. The tax collection process will not change, so the government expects customer interactions with HM Revenue and Customs to remain the same.¹

Equality, business and legal assessments

The equality assessment said the measure could affect anyone who purchases or consumes alcohol. It noted that drinking more than 14 units a week is associated with increasing or higher alcohol-related risk. Men represent an estimated 56% of people drinking at least weekly and 64% of those consuming more than 14 units a week, compared with 49% of the UK adult population. Adults aged 55 or older account for 47% of weekly drinkers, against 39% of the adult population, while those aged 45 to 74 comprise 56% of people drinking more than 14 units weekly, against 42% of the population.¹

Up to 8,000 businesses that produce alcohol in the UK, import it or hold it in duty suspension are expected to be affected. The government anticipates only negligible one-off costs for learning the new rates and no continuing administrative expense. HMRC will need minor information-technology changes, whose cost remains under review.¹

The policy will be implemented by amending schedules to the Finance (No. 2) Act 2023 governing the alcohol duty system, reduced draught rates and the tables used to calculate Small Producer Relief discounts.¹