Guide
UK alcohol duty after the August 2023 reform: strength-based rates, Small Producer Relief and what it means for distillers
How the 2023 UK alcohol duty reform works: one system taxing litres of pure alcohol by strength band, Draught Relief, Small Producer Relief — and why spirits sit outside the reliefs.
· 7 min read
The short version
- On 1 August 2023 the UK replaced four separate duty regimes (beer, cider, wine, spirits) with one system: every alcoholic product is taxed on its litres of pure alcohol (LPA), at a rate set by its strength band.
- The guiding principle is simple: the stronger the drink, the higher the rate per litre of alcohol. Spirits above 22% ABV sit in the top band.
- Two reliefs came with it — Draught Relief and Small Producer Relief — and both stop at 8.5% ABV, so neither applies to whisky at bottling strength.
- For a distillery, the practical effects: duty maths is now uniform (volume × ABV × rate), strength is a direct duty decision, and low-strength products (RTDs, liqueurs under 22%) may sit in cheaper bands.
If you only make whisky, the 2023 reform changed your paperwork less than the headlines suggested — spirits were already taxed on pure alcohol. But it changed the landscape: how everything else is taxed, what reliefs exist, where product development opportunities sit, and how the annual February rate changes work. Here is the system in plain English. General guidance, not tax advice.
Before and after
Before August 2023, the UK had inherited a patchwork: beer taxed on alcohol content, cider on volume regardless of strength, wine in bands, spirits on pure alcohol. The same unit of alcohol could carry wildly different duty depending on which drink it arrived in.
After the reform, there is one question: how many litres of pure alcohol, and in which strength band? The structure:
| Strength band | Who lives here | Rate basis |
|---|---|---|
| Below 1.2% ABV | No/low alternatives | No duty |
| 1.2% – 3.4% | Light beers, low-strength RTDs | Lowest rate per LPA |
| 3.5% – 8.4% | Most beer and cider, many RTDs | Low rate per LPA (reliefs available) |
| 8.5% – 22% | Wine, fortified wine, liqueurs, strong cider | Higher rate per LPA |
| Above 22% | Spirits — whisky, gin, rum, vodka | Highest rate per LPA |
At launch, the top band was £31.64 per LPA. Rates are typically uprated each February — from 1 February 2026 the above-22% rate is £33.99 per LPA. The lower bands are uprated too; always take current figures from HMRC's rates page or our 2026 rates article with per-bottle examples.
One transitional quirk worth knowing is gone: the temporary "easement" that let all wine between 11.5% and 14.5% be treated as 12.5% ABV ended on 1 February 2025. Wine is now taxed on its actual strength like everything else — relevant if you also bottle or distribute wine-strength products.
The two reliefs (and why whisky gets neither)
Draught Reliefcuts the duty rate on draught products under 8.5% ABV sold in containers of 20+ litres for on-trade dispense. It exists to favour the pub pint over the supermarket can. Spirits are above 8.5%, so it never applies to them — a whisky highball on tap doesn't qualify via the whisky.
Small Producer Relief (SPR) replaced Small Brewers Relief and extended it to all product types — but only for products under 8.5% ABV, made by producers under a production ceiling (measured in annual LPA). The relief tapers as production grows.
The consequence for distilleries is blunt: there is no small-distillery relief on spirits. A two-person farm distillery pays the same £33.99 per LPA on its whisky as a multinational. Where SPR does touch a distillery is in the portfolio: a canned RTD at 5% or a spritz at 7% qualifies for a lower band andpotentially SPR, while the same brand's 40% bottling pays full freight. That asymmetry is exactly why so many distilleries launched sub-8.5% products after 2023.
A worked contrast, per litre of finished product (illustrative, at current top-band rate):
- 70cl whisky at 46%: 0.322 LPA × £33.99 ≈ £10.94 per bottle
- 330ml RTD at 5%: 0.0165 LPA at the 3.5–8.4% band rate ≈ tens of pence per can, before any SPR
Same brand, same shelf, radically different duty structure.
What else the reform touched
Approvals and returns. From 1 March 2025, alcohol producers hold a single Alcoholic Products Producer Approval (APPA) instead of the old per-regime licences, and file Alcohol Duty returns through HMRC's Manage your Alcohol Duty service. If you operate an excise warehouse, duty on goods released from bond can still be declared through ATWD and the W5/W5D — and HMRC asks warehousekeepers in that position to file a nil return through the new service. Which route applies depends on your approvals; confirm with HMRC or your adviser.
The annual rhythm. Rates are reviewed at fiscal events and typically change on 1 February. The rate that applies to your stock is the one in force on the day it is released from bond, not the day it was made or bottled — so a February increase reprices your entire unreleased duty liability overnight. Our rates article covers what to update when that happens.
The unit, everywhere.LPA was already the spirits unit; now it is the whole industry's unit. If your production, stock and release records all carry LPA natively, every duty question — any product, any band — is one multiplication.
Where distilleries trip over the new system
- Assuming a relief applies. SPR and Draught Relief stop at 8.5% ABV. No exceptions for size, craft status or good intentions.
- Pricing RTDs with spirits-band maths(or vice versa). A portfolio spanning bands needs the band logic in the costing, not a single blended "duty %".
- Missing the band boundary in product development. 8.4% and 8.6% are different worlds; 21.9% and 22.1% likewise. Liqueurs hovering near 22% deserve a deliberate decision.
- Using the bottling-date rate.Duty is set at release. Stock bottled in January and released in March pays March's rate.
- Forgetting the wine easement ended. Any wine-strength products are on actual ABV since February 2025.
How Provenate handles the duty system
Provenate is distillery management software with the duty structure built in:
- LPA as the native unitfrom mash to bottle, so any product's duty is derivable at any moment.
- Band-aware rates, date-aware application.Each product's strength places it in a band; each release applies the rate in force on its date; February changes are one central update.
- W5 and W1 that agree by construction.Duty-paid releases build the W5 and land on the W1's home-use line in the same period — the reconciliation HMRC checks first.
- Portfolio visibility. Duty shown per product and per release, so the RTD and the cask-strength bottling are each costed on their own band.
Book a demo and see your range costed band by band.
Official sources
Frequently asked questions
What changed in UK alcohol duty in August 2023?
Four separate duty regimes were replaced by one system: every alcoholic product is taxed on its litres of pure alcohol, at a rate determined by its strength band, with higher-strength products paying more per litre of alcohol.
Does Small Producer Relief apply to whisky or gin?
No. Small Producer Relief only applies to products under 8.5% ABV. Spirits at bottling strength are excluded regardless of how small the producer is — there is no small-distillery relief on spirits duty.
What is Draught Relief?
A reduced duty rate for products under 8.5% ABV packaged in large containers (20 litres or more) for on-trade dispense. It favours draught beer and cider in pubs and does not apply to spirits.
What duty band do spirits fall into?
The top band, for products above 22% ABV — £33.99 per litre of pure alcohol from 1 February 2026. Spirits-based drinks diluted below 22% (many liqueurs and RTDs) fall into lower bands based on their actual strength.
Which rate applies when duty rates change?
The rate in force on the date the product is released for UK consumption — not the production or bottling date. February rate changes therefore affect all stock still in bond.