Alcohol prices in pubs and supermarkets to be pushed up by perfect storm of rule changes
ALCOHOL prices in pubs and supermarkets to be pushed up by a perfect storm of rule changes.
Changes to tax on alcohol, packaging and employers are set to hit drinkers in the pocket.
Alcohol duty rates in the UK will rise on February 1, 2025
Alcohol duty typically goes up in line with inflation each year, but two years ago it was frozen until February 2025.
It means producers will have to hike the price of beer, wine and spirits to offset raised levies.
Alcohol duty is charged on all drinks which are more than 1.2% ABV strength, either at the point of production or when they are imported.
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Usually, alcohol duty rises each year in line with inflation unless the Chancellor chooses to freeze it.
Higher taxes mean higher prices as companies pass on the rise to customers.
It comes as Heineken said it would hike the price of its draught beer by an average of 2.97% for pubs from next month because of the change.
The hike in the wholesale cost of beer could be passed on to customers if pubs, already under-pressure, cannot absorb the additional costs themselves.
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It means the price increase could affect the cost of beers on tap such as Birra Moretti, Heineken, Fosters and Tiger.
The major brewer said the change will come into force on all deliveries from February 1, 2025.
And it's not just beer drinkers which can expect to feel the pain, wine and spirit lovers are also at risk of paying more.
For example, the duty on a bottle of wine at 14.5% ABV will increase from £2.67 a bottle to £3.21 at the start of next month.
Miles Beale, chief executive of the Wine and Spirit Trade Association told The Sun that the "never-ending assault" on wines and spirit businesses mean consumers need to brace themselves to "pay substantially more for their favourite products".
NEW TAX ON WASTE PACKAGING
Punters could be set for another blow come April, when a new tax could see products sold in glass bottles rise by 10p.
In December Parliament passed a new legislation called the packaging extended producer (pEPR) scheme.
The aim of the new legislation is to shift the cost of household recycling from councils back onto the companies using the packaging.
Government also wants to reduce packaging waste and litter, and to improve the quality of materials recycled.
It means that come April brands and retailers, such as beer and wine makers, will have to cover the costs for their packaging's collection, sorting, recycling or disposal.
Prior to this local authority covered the costs.
Industry body British Glass said fees for glass beverage packaging will be around "49 times higher than other materials."
That's because the new tax is based on the weight of packaging, meaning glass will have higher fees than lighter materials.
In a statement British Glass representatives said: "Heavier containers like glass will incur higher levies, meaning products in glass bottles and jars are set have an additional cost in excess of 10p."
Many wine, spirit and beer makers choose to package their products in glass bottles.
So if they incur a higher tax on this product it could lead them to raise prices for consumers to help offset the cost.
RISES IN NATIONAL INSURANCE CONTRIBUTIONS
Many hospitality and pub groups have warned they could be forced to raise prices following the recent Budget announced by Labour Chancellor Rachel Reeves.
Yesterday, the head of Revolution Bar said the move would have a very "damaging impact" on the group.
In a statement to investors, chief Rob Pitcher said the reduction in the National Insurance thresholds would be "regressive" and "offer no clear pathway for economic growth within the hospitality sector".
The chain closed 25 sites last year as part of a restructuring plan, blaming Brits spending less on nights out for its troubles.
Chief executive officer of Fuller's, Simon Emeny, previously told The Sun the price of beers at its hotels and boozers would likely rise by 10p.
Wetherspoons' boss Tim Martin also said the hike in increased staffing costs had a “significantly bigger impact on pub and restaurant companies than supermarkets”.
He said in Spoons' results statement: “Wetherspoon therefore calls upon Sir Keir Starmer to redress this imbalance, thereby striking a blow for tax equality and ending discrimination in favour of dull (yawn, yawn) dinner parties.”
Chancellor Rachel Reeves said during her autumn statement she would raise employers' National Insurance contributions (NICs).
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It's estimated that the move will raise £25billion - the equivalent of around £800 per employee for each firm.
At the same time, the minimum wage will rise to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
HOSPITALITY ON 'CLIFF EDGE'
Emma McClarkin, chief of the British Beer and Pub Association, told The Sun these changes leave hospitality businesses on a "cliff edge".
The impact of the budget alongside changes to tax could leave the sector with a £650million loss.
She said: "Brewers and pubs pour billions into the economy and Treasury, support more than a million jobs and are a cornerstone of the community.
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"However, we face a cliff edge in April when a staggering £650m extra in costs will kick in, including the ending of vital business rates relief, new employer costs, and the beer bottle tax."
The industry leader said these changes could "lead to businesses being forced to pass on extra costs to customers".
What is National Insurance?
NATIONAL Insurance is a tax on your earnings, or profits if you're self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You'll usually pay National Insurance Contributions (NICs) when you're over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 - so £72.50. Then you pay 2%o on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
You can also get something known as National Insurance in some circumstances when you're not working, for example when you have kids and claim certain benefits.
NICs are usually taken automatically by your employer and paid to HMRC, so you don't need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.