Chancellor Rachel Reeves has revealed the upcoming increase in alcohol prices for consumers across various outlets like shops, bars, pubs, and restaurants in the upcoming year. This announcement was made as part of the Budget address today. Alcohol tax in the UK is a duty paid by producers and importers, determined by the alcohol’s strength (ABV) and category.
In her Budget speech, Rachel Reeves confirmed that alcohol duty will climb in line with inflation. Typically, this increase aligns with the Retail Price Index from September, which stood at 4.5% this year. The adjustment will take effect on February 1, 2026, to maintain the current real-terms value of alcohol duty.
Reeves emphasized the government’s consideration of various viewpoints, ranging from calls for a duty cut or freeze to above-inflation hikes. She highlighted the delicate balance between the contributions of alcohol producers and the hospitality industry to the UK’s culture and economy, alongside the duty’s role in mitigating alcohol-related harm.
Despite industry leaders urging for a duty freeze in this year’s Budget due to the impact of previous tax hikes and the new glass tax, alcohol prices have already risen by 5.8% compared to last year, as per official data.
Last year saw a 3.6% increase in alcohol duty, translating to a 54p rise for a bottle of wine, a 32p increase for gin, and a 1.7% cut in draught duty, equivalent to a penny off a pint, in the 2024 Budget. The Wine and Spirit Trade Association (WSTA) CEO, Miles Beale, expressed concerns over the cumulative effect of these tax changes on businesses in the industry.
The decision to once again raise alcohol duty received criticism from industry stakeholders, citing its adverse implications on businesses, consumers, and overall economic growth. Conversely, the Alcohol Health Alliance (AHA) welcomed the move, viewing it as a step towards a more responsible approach to alcohol taxation.
For the financial year 2025-26, the UK anticipates generating approximately £13 billion from Alcohol Duty, contributing significantly to government revenue. Comparative data on EU and UK excise rates for beer, wine, and spirits position the UK among the highest taxed jurisdictions, following countries like Finland and Ireland.
The existing duty rates, which vary based on alcohol content and type, will be adjusted in line with inflation, leading to higher costs for consumers at pubs and retail outlets.
