January, 2017

52 Ways to Save Tax #28

Pay less taxMillions of people across the UK like to enjoy a pint at their local pub. But did you know that if you drink very strong beer then you are also paying more tax?

In the latest part of our “52 Ways to Save Tax” guide, we look at how you reduce the amount of tax that you pay simply by switching to a weaker beer.

52 Ways to Save Tax – Part 28: Drink weaker beer

Drinkers have paid tax on beer in the UK for over three hundred years. The first beer duty was introduced in 1690 and now beer drinkers in the UK pay some of the highest tax in the world.

In 2015, British drinkers paid around 52 pence per pint in beer duty (assuming an average pint of 5 per cent ABV beer). This is compared to just 4 pence in Spain and Germany, 9 pence in Belgium and 16 pence in the Netherlands. Britons pay almost 40 per cent of all EU beer duty but only consume 12 of the beer.

In 2011, the Chancellor announced changes to the way that beer duty was calculated. As well as introducing a reduced tax rate for lower strength beer, George Osborne also increased the duty on high strength beer. The additional duty on beer with an  alcohol by volume (ABV) of over 7.5 per cent added 25p to the price of a can of ‘super strength’ lager in 2011.

Currently, the amount of beer duty that you pay depends on the beer’s strength (or ABV).

  • Strength 1.2 per cent to 2.8 per cent – 8.1 pence per litre for each % of alcohol
  • Strength 2.8 per cent to 7.5 per cent – 18.37 pence per litre for each % of alcohol
  • Strength 7.5 per cent and above – 23.85 pence per litre for each % of alcohol

The tax changes mean that a lower strength beer can now be up to 50p a pint cheaper than a high-strength alternative.

Here’s an example. If you buy a pint of 5.0 per cent strength lager, the beer duty you pay is 18.37 pence x 5.0 = 91.85 pence per litre. This works out at just over 52 pence a pint (about 568ml or 0.568 litres).

If you buy a pint of 2.7 per cent strength lager, the beer duty you pay is 8.1 pence x 2.7 = 21.87 pence per litre. This works out at around 12.5 pence per pint.

By choosing the lower strength beer you pay around 40 pence less tax on every pint that you drink.

Research has also found that the prospect of drinking weaker beer appeals to many pub-goers. A survey by the Campaign for Real Ale (CAMRA) concluded that 52 per cent of drinkers would consume a lower-strength beer if it were available in their local pub.

Drinking beer means paying less tax than drinking spirits

Drinking beer is also much more tax-efficient than drinking spirits. Currently, you pay £27.66 of ‘spirit duty’ per litre of pure alcohol.

This means that the duty you pay on a pint of 40 per cent ABV vodka is around £6.28 (compared to just 12.5 pence a pint on low-strength beer).