Chancellor Rachel Reeves has disclosed the upcoming increase in alcohol prices across various retail outlets as part of today’s Budget announcement. Alcohol tax in the UK, an excise duty paid by producers and importers, is determined by the alcohol’s strength (ABV) and category.
During her Budget speech, Rachel Reeves revealed that alcohol duty would be adjusted to match inflation rates, which typically align with the Retail Price Index from September. This year’s index was recorded at 4.5%, leading to an uprating of alcohol duty with the RPI on February 1, 2026 to maintain its current value in real terms.
Reeves stated, “The government carefully considered the viewpoints of stakeholders advocating for a duty cut, freeze, or above-inflation increases. This decision aims to strike a balance between the contributions of alcohol producers and the hospitality sector to the UK’s economy and cultural landscape, while also addressing the duty’s role in curbing alcohol-related harm.”
Industry leaders had lobbied for a duty freeze in this year’s Budget, citing the ongoing impacts of previous tax hikes and the additional burden of the new glass tax. Official figures indicate that alcohol prices have already risen by 5.8% compared to the previous year.
Last year, drinkers faced a 3.6% increase in alcohol duty, translating to a 54p rise for a bottle of wine and a 32p increase for gin, while draught duty was reduced by 1.7%, equivalent to a penny off a pint, in the 2024 Budget. Miles Beale, CEO of the Wine and Spirit Trade Association (WSTA), expressed concerns, labeling the current situation as a series of detrimental cuts affecting wine and spirit businesses.
The decision to raise alcohol duty has drawn criticism from various sectors. The UK Spirits Alliance spokesperson, Karl Mason, highlighted the negative impact on distillers, pubs, and the wider hospitality industry, emphasizing the potential for businesses to face financial strain and potential closures.
Conversely, the Alcohol Health Alliance (AHA) welcomed the Chancellor’s decision to align alcohol duty with inflation, marking a shift towards responsible alcohol taxation. AHA chairman Professor Sir Ian Gilmore emphasized the importance of maintaining alcohol duty to address public health concerns and protect the nation’s well-being.
The article underscores the economic significance of alcohol duty for the UK, projected to generate around £13 billion for the financial year 2025-26. Comparatively, the UK ranks among the highest in excise rates for beer, wine, and spirits within the EU, trailing only a few high-duty countries like Finland and Ireland.
Despite fluctuating nominal receipts, alcohol duty’s share of total government revenue has gradually declined over the years. The duty rates vary based on the type of drink and alcohol content, with different rates set for various categories of alcohol beverages.
In conclusion, the forthcoming adjustments to alcohol duty, in line with inflation, will lead to increased prices for alcohol in pubs and retail establishments.