Chancellor Rachel Reeves has revealed the upcoming increase in alcohol prices across retail outlets, bars, pubs, and restaurants as part of today’s Budget announcement. In the UK, alcohol tax, an excise duty paid by producers and importers, is determined by the alcohol’s strength (ABV) and category.
During her Budget speech, Rachel Reeves stated that alcohol duty would rise in line with inflation, following the 4.5% increase in the Retail Price Index from September. The adjustment is scheduled for February 1, 2026, to maintain the current real value of alcohol duty.
Reeves emphasized the government’s decision to balance the interests of alcohol producers and the hospitality industry with the duty’s role in mitigating alcohol-related harm, considering various stakeholders’ input ranging from duty cuts to above-inflation increases.
Industry leaders had pushed for a freeze on duty in this year’s Budget, citing challenges from previous tax hikes and the introduction of the glass tax. Official figures indicate that alcohol prices have already risen by 5.8% compared to the previous year.
In the previous year, alcohol duty saw a 3.6% increase, leading to price hikes of 54p for a bottle of wine and 32p for gin, while draught duty experienced a 1.7% reduction. Miles Beale, CEO of the Wine and Spirit Trade Association (WSTA), expressed concerns over the cumulative impact of tax hikes on businesses in the sector.
The decision to raise alcohol duty received criticism from various industry representatives, highlighting the potential negative effects on businesses, consumers, and government revenues. Conversely, the Alcohol Health Alliance (AHA) supported the Chancellor’s move, emphasizing the importance of maintaining alcohol duty to address public health concerns.
Alcohol duty plays a significant role in the UK economy, projected to generate approximately £13 billion in the 2025-26 financial year. Comparative analysis shows the UK’s alcohol excise rates ranking among the highest in the EU, particularly for beer and wine products.
The duty rates are categorized based on the alcohol content, with varying rates for different drink types. The duty structure will be adjusted in line with inflation, resulting in higher prices for alcohol in retail and hospitality settings.