Small brewers feel bitter at tax bonus for cider makers

Small brewers have expressed alarm at the government’s proposed reform of alcohol duty, and want to know why the mooted tax on cider will be only half the rate on beer.

The government, which announced a review of alcohol duty in March 2020, launched a consultation in last year’s budget aimed at simplifying the “complex, burdensome and inconsistent” tax system.

Hailed by Rishi Sunak as “the most radical simplification of alcohol duties for over 140 years”, the new system was designed to reduce the number of main duty rates from 15 to six under the principle of “the stronger the drink, the higher the rate”.

Ian Fozard, of the Society of Independent Brewers and chairman of Rooster’s Brewery, in Harrogate, said that under the present system beer duty is linked to strength whereas cider is taxed at a flat rate equivalent to 44 per cent of a similar strength beer.

He said that the brewing sector’s hopes that the issue would be addressed in the reforms had been dashed, despite statements of support for equivalence across drinks sectors and support for this from the health lobby.

“Perversely the government is still proposing to tax beer and cider on a significantly different basis despite those two drinks categories clearly being equivalent products in terms of strength and consumer appeal,” he said.

Fozard, 68, said that the cider industry would also continue to benefit from the so-called farm gate exemption, whereby the first 70 hectolitres — 12,318 pints — of production is exempt from duty and producers do not have to register with HM Revenue & Customs.

He said it was ironic that, if the government were to bring in equivalence between beer and cider, the Treasury would raise £350 million more tax.

The consultation document says that while equalising beer and cider duty would make the duty system “even simpler and more coherent”, the government is mindful of the “significant impact this would likely have on the cider industry, with apple and pear cider volumes decreasing by 28 per cent between 2009 and 2019”.

However, Fozard said this was likely to be due to a shift to fruit cider, which is not primarily made from apples or pears, adding that five of the top six cider brands were either made outside the UK or owned by Heineken, the world’s second biggest brewer.

“What is not mentioned is that between 2000 and 2019, overall UK cider volumes increased by 13 per cent, whereas beer volumes declined by 19 per cent over the same period. There is therefore no basis in logic for this contradictory decision.”

Mike Wood, 45, the Conservative MP for Dudley South and chairman of the all-party parliamentary beer group, said: “I enjoy a pint of cider, but nobody can explain why it pays half the duty as an equivalent strength beer. It’s not as though it’s any cheaper in the pub.”