Our Bounden Duty: Reforming Britain's alcohol policy to better target har
Alcohol duty raises around £12 billion a year, but the current system taxes every drinker in the hope of curbing the harmful consumption of a much smaller group. Most people drink responsibly, yet a moderate drinker’s first pint is taxed just as heavily as the twelfth drink of someone whose consumption causes serious harm. The 2023 reforms simplified the system, but left substantial inconsistencies in how different drinks are taxed. Beer and cider receive preferential rates, small producers benefit from relief that penalises growth, and the duty on wine can vary sharply according to its alcohol content, even where the difference is unlikely to affect harmful drinking.
The distortions are considerable. A pint of 3.4% draught lager incurs 17p in duty, while a double gin and tonic containing slightly less alcohol incurs 64p. The current system also favours certain producers and drinking habits, while making it harder for pubs to adapt to changing consumer preferences. Meanwhile, alcohol duty is becoming a less reliable source of revenue: receipts fell in 2025–26 despite rising rates, as alcohol clearances declined.
We propose a flat duty of 20p per unit of ethanol, regardless of drink strength, beverage type or producer size, alongside a generic on-trade relief of 6p per unit for pubs and other venues serving drinks on their premises. We also recommend abolishing Small Producer Relief and reinstating a mandatory wine easement for wines between 11% and 14% ABV, based on the market’s average strength over the preceding three years. The package would reduce alcohol duty receipts by an estimated £3.4 billion a year, a shortfall better addressed through broader VAT revenues or reductions in public spending than through taxes that continue to distort consumer choices.