Budget: Bars and pubs dodge alcohol duty bullet

• Sector suffered from sharp hikes in alcohol duty in recession as alcohol duty jumped 6.1% last year whilst overall tax receipts fell 1.4% .

Duty on alcohol has not been raised further following the emergency Budget today as widely feared.

Comments Clive Gawthorpe, tax partner at our Manchester office: “Despite being the Treasury’s traditional whipping boy, the bars and pubs sector has managed to dodge the bullet on this.”

“Finally some good news for the bar, pub and entertainment sector, which, on top of the general impact of the recession, has seen its tax bills increase rapidly over the last year.”

According research by our specialists, based on data from HMRC, alcohol duty shot up by 6.4% to £9 billion in 2009/10 whilst the overall amount of tax collected fell 1.4% to £409 billion.

The increase in cider duty of 10% above inflation announced in the March Budget will be reversed and there will be no increases in the rate of duty on beer, wine or spirits.

Comments Clive Gawthorpe: “This will come as a relief not only for cider makers, but for bars, pubs and restaurants, whose level of business has yet to fully recover from the recession.”

Clive Gawthorpe points out that bars and pubs will still be affected by an annual increase in alcohol duty of 2% above inflation until 2014/15 whilst the general increase in VAT to 20% will also add to their tax burden.

Comments Clive Gawthorpe: “Bars and pubs usually operate on tiny margins and further tax increases could cause carnage in the sector.”

“More needs to be done to avoid those businesses having to absorb tax increases themselves in order to keep customers flowing in.”

Our experts say that the increase in alcohol duty rates in 2013/14 and 2014/15 is expected to raise an additional £630 million for the Treasury.