UK duty updates August 2023

13min
The way alcohol is taxed in the UK is being updated on the 1st of August, 2023. In addition to rate changes, the new Alcohol Duty System includes a few major structural changes. These include replacing Small Brewers Relief with a unified Small Producer Relief and a new Draught relief system that provides reduced rates for qualifying products.
This guide outlines managing Small Producer Relief and Draught Relief in Breww. Breww is a brewery management software system which will calculate your beer duty for you (and much more). If you’re not already using Breww and you’re concerned about the changes, please see our website at breww.com and get in touch to see if we can help you.
Small Producer Relief
To find out more on Small Producer Relief then please see the article: hL of alcohol produced﻿.
Draught relief
The new Alcohol Duty System includes reduced rates for qualifying draught products.
A product qualifies if it is of an alcoholic strength of less than 8.5% and is dispatched in a container with a capacity of at least 20 litres. The container must be designed to connect to a pressurised gas or pump delivery system. HMRC have confirmed that they “deem gravity systems as qualifying” as well.
In Breww, any container type that is a type of either Cask or Keg with a gross capacity greater than or equal to 20 litres will be considered a large draught container for the purposes of Draught relief.
However, any product sold with draught duty relief applied cannot be “repackaged”, which, in other words, prevents those products from being sold for takeaway. This means that if any of your customers want to sell takeaway beer from qualifying draught products that they’ve purchased from you, you need to elect to pay the full rates to allow them to do so.
How do I configure when draught relief applies, and how can I elect to pay the full rates?
In Breww, you can configure whether or not you’d like draught relief to be applied automatically.
As well as setting a default in Beer duty → Annual estimate & settings → Toggle Apply draught relief by default, if applicable
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You can also set a default per Customer type in Customers → Settings & tools → Customer types → Edit → Select an option under Duty options.
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In addition, directly on an Invoice item by clicking the Edit icon → select an option under Duty options.
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This flexibility allows you to have draught duty relief automatically applied to any qualifying products sold to customer types that don’t sell takeaway beer, such as a traditional pub, but stop Breww from applying it for customer types who need the ability to sell takeaway beer, such as a bottle shop.
How do I know if Breww will apply draught relief on an invoice item?
If your settings are set up so that Breww will not apply draught relief to an invoice item, this will be made clear with an alert on the invoice item.
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If Breww will apply draught relief, you won’t see this alert.
Draught duty relief on PDF invoices
If you haven’t applied draught relief on a product and have elected to pay the full rate so that your customer can sell takeaway beer (or any other reason), then HMRC require this to be made clear on any documentation you provide your customers.
We have updated both Breww’s default invoice and delivery note template to include a message if draught relief has not been applied so that your customers have the required documentation.
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If you are not using Breww’s default template, you will need to update your own template to include the same or similar message. To help, we’ve provided the snippet that we’ve used in Breww’s template to display the message when required:
HTML
<td class="row-item">
    {{ line.product_name }}
    {% if line.draught_duty_relief_applied == false %}
        <br><small>Draught duty relief has not been applied.</small>
    {% endif %}
</td>
<td class="row-item">
    {{ line.product_name }}
    {% if line.draught_duty_relief_applied == false %}
        <br><small>Draught duty relief has not been applied.</small>
    {% endif %}
</td>
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This change can also be seen here in our template version comparison tool (v19 vs v20).
Webinar recording
We ran a webinar recently (28th July 2023), organised in conjunction with SIBA (open to their members only), to demonstrate these changes and answer your questions. A recording of this webinar can be watched below. If you were not able to attend the webinar and have any questions, this video is well worth watching 😄
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This has been cancelled, so we've hidden this section by default.
On the 18th of July 2023, HMRC updated Excise Notice 226 to include seemingly new information about a transition period from Small Brewers Relief to Small Producer Relief. The exact wording in Section 8 is as follows:
SBR eligible beer produced before the 1st of August 2023 will be charged at that SBR rate even if released on or after the 1st of August 2023.
﻿Beer production in the UK - GOV.UK﻿
We’re working on implementing this into Breww now, and Barry Watts at SIBA is kindly helping us clarify this scheme with HMRC beyond the single sentence they have provided above.
However, our understanding is that this means beer eligible for Small Brewers Relief that was produced before the 1st of August 2023 will be charged at the rate it would have been charged at if dispatched before the 1st of August 2023.
This means any Small Brewers Relief beer will not be eligible for Draught relief, as it is now being charged using the old rates. To ensure that your customers can take advantage of the fact your existing SBR eligible beer can’t have draught relief applied and they can therefore sell the beer for takeaway, Breww will warn you if you try and dispatch an order where you’ve specified that draught relief should apply, but the order has SBR eligible beer assigned. This allows you to then go into the order and remove the requirement to apply draught relief, so that your customer receives an invoice with the “Draught duty relief has not been applied” message displayed, allowing them to sell the beer for takeaway. Or, alternatively, you could assign non-SBR eligible stock and save the old stock for a customer who requires the full rates to be paid.
To determine when beer was produced for the purposes of this transition scheme, Breww will use the Date & Time of a packaging action. Or for any delayed racking releases with a reason of Conditioning or Maturing, Breww will use the date it was released.
This has been cancelled, so we've hidden this section by default.
We’ve had further news on this! HMRC have made a U-turn on the Small Brewers Relief to Small Producer Relief transition scheme - it will no longer be going ahead.
HMRC emailed us with the following:
Just to update you, the minister has now agreed to a policy change, under which all SPR-eligible goods which pass a duty point on or after 1 August will pay the SPR rates, rather than only those which are produced or imported into the UK on or after 1 August.
We understand that this is how industry has been managing the transition from one SBR year to another for many years, but this is not currently what the legislation says, so we will be amending that today or tomorrow.
Frequently Asked Questions (FAQs)
Why am I getting an error saying “This order requires 1 x Floral Haze IPA - 30L Keg to have draught duty relief applied, but is missing 1 that is eligible for draught duty relief”?
With the new duty regime, Breww now has a couple of extra checks to ensure that when you have asked Breww to apply draught relief to a product on an order, the actual stock assigned to that order qualifies for draught relief. This discrepancy, where you have a product that in theory qualifies for draught relief, but where the physical stock doesn’t, can occur for a couple of reasons.
The first is where you have assigned stock that was duty paid under the previous duty regime, as this stock doesn’t qualify for draught relief, even though the product itself would normally. In this case, you will receive an error message warning that “K0001 was paid under the previous duty regime. To deliver it on this order, please mark the corresponding invoice item as ‘Don’t apply draught relief’”.
The second reason is when the ABV of the beer is different from the ABV of the batch. If your beer’s Advertised ABV is 8.4% and therefore qualifies for draught relief, you’ll be able to set any invoice item with that beer to apply draught relief. However, if you’ve brewed a batch of that beer stronger than that, for example, you’ve manually set the batch’s ABV to 8.6%, then the stock of this batch doesn’t qualify for draught relief, and so when it is assigned to an order requiring draught relief to be applied, you’ll receive the warning: “Floral Haze qualifies for draught relief, but Batch 100 of Floral Haze doesn’t. To deliver it on this order, please mark the corresponding invoice item as 'Don’t apply draught relief”.
To resolve either message, you will need to go to the relevant invoice item, click Edit, and mark it as Do not apply draught relief. In the case of stock that was duty paid under the previous duty regime, the reason Breww requires this is only so that your customers can benefit from the fact the stock they received was paid under the old rates, and they can therefore sell it for takeaway. If you didn’t update the invoice item, the “Draught duty not applied” message would not appear on the customer’s invoice, and they would, therefore, not be legally allowed to sell the stock for takeaway, even though the actual stock doesn’t have draught relief applied.
However, we are aware this is extra admin that you may not want, so if you don’t mind sending your customer stock paid on the old rates without informing that they are eligible to sell it for takeaway, you can bypass this warning by going to Settings → Beer duty settings → Enable Treat stock duty-paid before August 2023 as Draught relief eligible. When enabled, Breww will not prevent dispatching orders that require Draught duty relief to be applied but have stock duty paid before August 2023 assigned. This will only bypass Breww’s check and won’t actually apply Draught relief, as they don’t qualify.
How do I calculate the volume of alcohol in a beer?
If you have a 5% ABV beer, then 5% of the volume of the beer is alcohol. If you produced 100L of 5% beer, then you produced 5L of alcohol.
Express the ABV percentage as a decimal (i.e. 5% = 0.05), then multiply this by the volume of beer produced to get the volume of alcohol.
Why are HMRC asking for 1 Feb to 31 Jan rather than a calendar year?
Your guess is as good as ours! Maybe they wanted you to be able to celebrate New Year properly?
That’s a great question, but it’s one for HMRC - they came up with this idea, not us 
Where can I find the excise duty notice from HMRC
You can see this here.
Does HMRC have an online duty calculator?
Yes, they do. However, it’s been buggy as we’ve reported to them a number of mistakes in their calculations. They said they would fix it, but we’ve not been told either way whether the fix is live yet. Assuming you’re looking for the right answers, we’d suggest using Breww’s duty calculations, but if you want to use HMRC’s calculator, you can find it here.