Britain’s alcohol duty revenue has stalled

New figures from HM Revenue and Customs show that Britain’s alcohol duty system has settled into a period of flat revenue, even as the Treasury prepares to review the tax rules introduced in 2023. The latest data, published on April 23, show that alcohol duty receipts rose from £7.9 billion in 2006-07 to £12.4 billion in 2025-26, but the share of gross domestic product has slipped from 0.5% to 0.4% over the same period.

The numbers suggest that the government has collected more money in cash terms over nearly two decades, but not enough to keep pace with the wider economy. After a rise to £12.1 billion in 2020-21 from £11.8 billion the year before, receipts climbed again to £13.1 billion in 2021-22 before falling back to £12.4 billion in 2022-23. HMRC said that swing reflected changes in drinking habits during and after the pandemic, when off-trade sales supported duty income during lockdowns and then eased as normal patterns returned.

Since then, annual receipts have been broadly unchanged. That plateau has become a central point in the debate over whether higher duty rates are helping public finances or discouraging consumption enough to limit revenue growth. Industry groups say the latest figures support their argument that the current system is too harsh on wine and spirits and may be suppressing demand.

Wine and spirits remain the largest sources of alcohol duty revenue and together account for about 70% of receipts. Miles Beale, chief executive of the Wine and Spirit Trade Association, said drinkers of those categories face the highest excise rates and bear most of the burden under what he called Britain’s unusually punitive regime. He argued that repeated increases in duty have not produced stronger returns for the Exchequer.

“With every new set of data, we see clearly that increasing duty rates year-on-year reduces consumer demand and income to the Exchequer,” Beale said. He added that combined wine and spirit duties were £188 million lower in 2025-26 than in 2024-25, and said the government’s planned evaluation of the 2023 reforms should lead to a broader rethink ahead of the Autumn Budget.

The beer market has also shown signs of strain within the duty system. HMRC data for 2024-25 showed beer duty falling 3% to £3.527 billion, even as total alcohol duty receipts edged up slightly overall. Wine brought in £4.735 billion that year, up 3%, while spirits generated £4.164 billion, up 1%. The beer decline stood out because it came during a year when the government had already adjusted parts of the tax framework.

Monthly figures from that period pointed to uneven trading patterns rather than steady growth. HMRC said a February spike was linked to stockpiling before duty changes took effect, not to a lasting increase in demand. That pattern reinforced concerns among producers and retailers that tax timing can distort sales without delivering durable gains for the Treasury.

The broader picture now facing ministers is one of stability without momentum. Alcohol duty remains an important source of revenue, but its growth has slowed and its share of GDP has drifted lower over time. The government’s review of the reworked duty regime is expected to examine whether the current structure is meeting its goals or simply shifting costs across categories without lifting overall intake.