Chancellor Rachel Reeves has disclosed the upcoming increase in alcohol prices across various retail outlets and establishments in the next fiscal year during today’s Budget announcement. In the United Kingdom, 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 revealed that alcohol duty will climb in line with inflation, aligning with the 4.5% rise in the Retail Price Index from September this year. The adjustment in alcohol duty to match the RPI on February 1, 2026, aims to preserve its current real value.
Addressing stakeholders’ diverse perspectives, Rachel 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. Industry leaders had advocated for a freeze in duty in this year’s Budget, citing the industry’s ongoing challenges following previous tax increases and the introduction of the glass tax.
In the previous year, drinkers faced a 3.6% hike in alcohol duty, resulting in price increases for beverages. Reacting to the latest decision on alcohol duty, industry representatives expressed concerns about the accumulative impact of successive duty hikes on businesses and consumers.
The UK Spirits Alliance spokesperson, Karl Mason, lamented the adverse effects of the duty increase, foreseeing detrimental consequences on distillers, pubs, and the broader hospitality sector. Despite the concerns raised by industry representatives, the Alcohol Health Alliance (AHA) welcomed the Chancellor’s decision to adjust alcohol duty in line with inflation, emphasizing the importance of maintaining duty levels in real terms for public health benefits.
Alcohol duty plays a significant role in the UK economy, projected to generate around £13 billion in the 2025-26 financial year. Comparisons of excise rates across the UK and EU show the UK ranking among the top countries in duty levels for beer, wine, and spirits. The duty rates vary based on the type of drink and alcohol content, with adjustments made in line with inflation to impact consumer prices in pubs and retail stores.