Budget sees value of beer, wine, and spirits all go up
Chancellor Rachel Reeves announced that alcohol duty would rise in line with RPI inflation
Chancellor Rachel Reeves has revealed the increase in alcohol prices for the coming year, affecting purchases in shops, bars, pubs and restaurants, as part of today’s Budget announcement. The UK’s alcohol tax is an excise duty paid by producers and importers, calculated based on the strength (ABV) and category of the alcohol.
In her Budget speech, Reeves confirmed that alcohol duty would rise in line with inflation, typically tracking the Retail Price Index from September – which this year stood at 4.5%.
This duty plays a crucial role in the UK economy. For the financial year 2025-26, it is predicted to generate around £13 billion. This figure equates to 1.1% of all government receipts, approximately £450 per household, and roughly 0.4% of national income.
A 2025 comparison of EU and UK excise rates across beer, wine and spirits places the UK third highest overall (among all EU plus UK), trailing only a few high-duty countries like Finland and Ireland. Specifically, for beer: a 330 ml bottle of 5% ABV beer in the UK is taxed at about €0.4187 – the second-highest in the EU/UK ranking for that product after Finland, reports the Mirror.
When it comes to wine, the UK imposes a significant duty, while many European wine-producing countries do not. As per a 2024 analysis, 15 EU member states impose zero duty on wine; many others levy only minimal amounts. Specifically, the average bottle of wine in the UK incurs around £2.35 in excise duty.
Despite nominal increases over time, the proportion of total government revenue from alcohol duty has been on a downward trend, dropping from approximately 1.8% in 1999/00 to 1.5% in 2018/19.
The rates are determined per litre of pure alcohol and vary greatly among different types of beverages, with a new rate system introduced in August 2023. Different rates apply to beer, cider, sparkling cider, spirits and spirit-based drinks, wine, and other fermented products, as well as a specific duty for draught items.
In essence, the excise duty added to the price of alcoholic beverages ranges from zero for drinks with an ABV below 1.2%, up to £32.79 per litre of pure alcohol for drinks stronger than 22% ABV.
Each category of drink can have up to six levels of duty, which increase with higher ABV levels. These figures will now be adjusted in line with inflation, which means the cost of alcohol in pubs and shops is set to rise.
