Devon gin maker fears further tax increase in Budget

A gin producer and drinks maker is concerned the chancellor might increase tax on spirits again in the Budget.

The previous Conservative government increased excise duty by more than 10% in August 2023 and Labour increased the tax by another 3.65% in 2024.

Mick Skerratt from Exeter Gin said another increase in duty would be a tough blow to take at a time when all other production costs are increasing.

HM Treasury said the majority of UK spirits were exported and so not liable for UK alcohol duty.

Mr Skerratt said: “It would put a massive pressure on us as a business and also to our customers.

“There’s only so far that a margin can stretch and profitability will be affected.”

The gin producer said the spirits industry was being “used as a bit of a cash cow for the government”.

He said: “We’re in a cost of living crisis and there’s a tipping point to what people are prepared and able to pay and it doesn’t help anybody – it doesn’t help the consumer and it doesn’t help us as a small business.”

The All-Party Parliamentary Group (APPG) on UK Spirits, which was set up to support the industry, said the number of distilleries in the UK had tripled in the past seven years, from 350 to 1,050, which it described as “a modern British success story”.

The group said excise duty accounted for about 70% of the price of an average bottle of spirits sold in the UK.

The group’s chairwoman, Labour MP Carolyn Harris, called for a complete freeze on excise duty in Wednesday’s Budget and for the remainder of this Parliament.

She said: “By not freezing duty we’re putting all distillers in a position whereby they’re going to have their business threatened or they’re going to create unemployment which would be no good for the economy.

“It makes sense to me to freeze the duty so at least the industry can move on from where they are now and start to thrive and survive.”

Duty on beer has been frozen or reduced at every Budget for the last 12 years and the APPG said the discrepancy in changes to taxation on beer and spirits was unfair.

Brewery boss Alan Collyer said any changes to duty on beer had little impact compared to the wider problems facing small businesses.

Mr Collyer, owner of Exeter Brewery, said: “These pennies here and there really don’t make a significant enough difference to drive people back to pubs.

“You’ve got the contrast between very cheap alcohol in the supermarkets compared to increasing costs of a pint of beer in a pub and it would need substantive change to make people think it was worth going back to the pub again.”

A spokesperson for HM Treasury said “our distilleries are vital to Britain’s economy”.

“We’re making it easier for them to thrive: no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax,” they said.