UK: Scotch Whisky Association welcomes duty freeze in new budget

The Scotch Whisky Association has welcomed the continued freeze on spirits announced in Chancellor Rishi Sunak’s Budget on March 11, the Scottish Field reported.

They were also pleased by the additional support for the industry through a green energy fund, while the industry continues to face a 25% tariff imposed on single malt by the US government under a transatlantic trade dispute between aircraft manufacturers.

The duty rate on spirits remains £28.74 per litre of pure alcohol, meaning that of the £14.61 average price of a bottle of Scotch Whisky, £10.49 is collected in taxation through duty and VAT. The tax burden on Scotch whisky remains 72%.

A 25% tariff on exports of single malt Scotch whisky and liqueurs to the United States has been in place since October 2019, and the SWA had called on the Chancellor to cut duty on Scotch whisky to help support the industry during a challenging time.

As well as freezing duty, the Chancellor announced a £10 mln R&D fund to help the industry achieve its net-zero ambitions and additional support to promote Scotland’s food and drink exports, including Scotch whisky.

In addition, the review of alcohol taxation, announced in the Queen’s Speech, will pave the way for fairer taxation for Scotch whisky. Spirits continue to be taxed at a higher rate per unit of alcohol than any other category – 16% more than wine and 256% more than cider.

Chief executive of the SWA Karen Betts said: ‘We welcome the fact that excise duty on spirits has been frozen for nearly three years and the Chancellor’s announcement today that excise duty will not rise further. However, our industry needs continued support, through the upcoming review of UK alcohol taxation and while our exports remain subject to US tariffs.

‘The fact remains that duty on spirits in the UK is already very high and puts Scotch whisky at a competitive disadvantage to wine, beer and cider, with £3 in every £4 spent on an average-price bottle of Scotch whisky going to the government in tax. The review of alcohol taxation is an important opportunity to address that. The Treasury should move quickly to ensure that alcohol taxation is clearer for consumers, fairer for producers and that it supports important domestic products like Scotch whisky.

‘Our industry also continues to face significant damage to exports to the US, our largest and most valuable market, because of a 25% tariff imposed on single malt Scotch whisky by the US government as a result of a long-running dispute between American and European aircraft manufacturers.

‘We are pleased that the Chancellor underlined the UK government’s commitment to resolving these damaging tariffs quickly, while also announcing measures to support Scotch whisky in a challenging period – including through a green energy fund to support our industry’s leading work to decarbonise the energy we use and achieve net-zero, and new funds for export promotion.

‘We look forward to working with government and others to implement these policies and ensure that Scotch Whisky can continue to grow and contribute to the UK economy.’

The freeze was also welcomed by Dayalan Nayager, managing director, Diageo Great Britain, Ireland and France, owners of many of Scotland’s whisky distilleries, including Johnnie Walker.

He said: ‘We welcome the Chancellor’s duty freeze which will provide much needed stability in these difficult times for the industry. We are delighted that he announced his intention to reform the duty system to bring fairness for gin and Scotch whisky, which should ensure that these iconic home grown products no longer face punitive levels of tax.

‘Drinkers across the country will raise a toast to the Chancellor tonight. The Government’s measures to help the hospitality and retail sectors will also be a welcome move for our customers, their employees and consumers in general.’

12 March, 2020