A new system for duties on alcoholic drinks is due to come into effect next month, with new rates applying from 1 August 2023.
Currently, beer and spirits are taxed based on their alcoholic strength which is measured by alcohol by volume (ABV), while the other types of alcohol are taxed on a specific duty based on overall volume.
This means in some cases, products of the same alcoholic strength may be taxed at significantly different rates.
The upcoming reforms aim to simplify the system, broadly increasing the tax as the alcoholic content rises. Different rates will apply to products between 3.5% ABV and 8.4% ABV. A full summary of the new rates can be found on GOV.UK.
Jonathan Athow, director general of customer strategy and tax design at HMRC, said:
"After listening to feedback from industry, economists, public health groups and many business owners, the new alcohol duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time.
"The new system will support the Government's public health objectives and provide extra support to small producers, pubs and the hospitality sector."
Some industry groups have called for the changes to be scrapped, however, citing additional costs for manufacturers of products with higher alcohol content.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said:
"We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs. Inevitably some won't be able to stay afloat, with SMEs most at risk."
Get in touch for advice on tax and duties.