Small Brewery duty sees craft brewery industry split

The proposed changes to the Small brewery duty levy announced earlier in 2020 rumble on. Brewing in itself along with the advent of the micro/craft brewery have seen the landscape change significantly. The original proposals put forward in order to stimulate small businesses, together with an overhaul of business rates. Introduced in 2002 small brewery duty encouraged craft brewers to be creative and compete against the corporates. The tax break saw a 50% discount on duty for brewers producing below 5,000 hl (approx. 880,000 pints). When a brewer goes over the 5,000hl threshold the discount is tapered on a sliding scale. Government proposals were to reduce this 5,000hl capacity downwards to 2,100hl, this in order to boost productivity and support growth. However a petition to reverse the decision fell short receiving only 51,609 signatories prior to closing.

Moreover there are critics who claim that the relief dissuades a typical smaller craft brewery from expanding. Various midsized brewers have been calling for change for some years. However the ongoing covid crisis compounds the indecision and uncertainty. The petition cited that the changes threatened closures, competition, jobs, innovation, consumer choice and investment. As with all tax reforms there will undoubtedly be winners and losers. The Small Brewers Duty Reform Coalition have been largely responsible for the change in direction to the SBR. Many mid sized but more established breweries set about lobbying government. The coalition claiming that SBR in it’s current format is a tax anomaly. Around 150 UK breweries produce between 2,100hl and 5,000hl and under proposals will see duty increase. Others also point to how the relief gave smaller breweries and start ups a foot in the door. To invest in brewery cooling equipment, premises and staffing.

Small Brewery Duty decision January 2022 at the earliest

The government response to the petition on the 27th August 2020 claim the Small Brewery Duty reform will not affect over 80% of brewers. Interestingly The Treasury considers a brewery that produces over 1,000 pints daily then transitions from a micro brewery. The government are keen to point out that they invest £65 million per annum in the craft brewery industry. Though taking revenue from December 2019 alone, leading up to Christmas, beer duty was around £400 million. This revenue apart from wine, spirits and cider duty. It is anticipated that those breweries in the 4,000-5,000hl bracket will feel the change most acutely. However changes will not take place until January 2022 at the earliest.

Small Brewers Relief: Technical Consultation – January 2021