Study Says Raising Draught Relief to 50% Could Add £310m to the U.K. Economy

A proposal to increase tax relief on beer served from taps and hand-pulls in pubs could add almost £310m to the UK economy and create more than 7,600 jobs, according to research published Wednesday as brewers and pub operators step up pressure on the government before the Autumn Budget.

The study, prepared by the Centre for Economic and Business Research, said raising Draught Relief to 50% would lead to an additional 56.4 million pints sold in the on-trade, the industry term for pubs and other licensed venues. It estimated that the change would create 7,663 full-time equivalent jobs across brewing and hospitality and lift gross value added by nearly £310m.

Cebr said £207m of that increase would come from the on-trade and £103m from brewing. It also projected an extra £119.5m in tax receipts across the supply chain, not counting any change in excise duty.

The findings come as the beer and pub sectors argue that the current tax structure is weighing on sales and employment at a time when many operators are still dealing with high costs. Draught Relief now stands at 13.9% and applies to beer sold in pubs through keg taps and hand-pulls.

The report also modeled a smaller change. If Draught Relief were increased to 30%, Cebr said that would still result in 25.2 million more pints sold, 3,403 additional jobs and a £137.4m rise in gross value added. In that scenario, it estimated nearly £53m in additional tax receipts across the supply chain, again excluding any shift in excise duty.

The research was released after the launch last week of the Drop the Tap Tax campaign, which is asking Chancellor John Healey to cut tax on beer in the Autumn Budget scheduled for October 28. The campaign is being led by the Society of Independent Brewers and Associates, known as SIBA, which says it represents about 700 small and independent breweries.

SIBA argues that breweries now pay around 40% of their turnover in tax and says a more favorable rate for draught beer would help rebalance the burden on brewers and pubs. The group says community pubs and small breweries would be among the main beneficiaries because a lower tax load could support higher sales and more hiring. For drinks companies, pub groups and suppliers, the estimates offer a clearer measure of how a targeted tax change in the on-trade beer market could affect demand, staffing and investment plans ahead of the budget.

Andy Slee, SIBA’s chief executive, said the research showed that lower tax on beer sold in pubs would support economic activity while helping pubs and breweries increase sales. He said the sector is looking for a “huge boost” from the chancellor’s budget decisions.

The campaign is focused on draught beer rather than a broader change to beer duty. That distinction matters because the projected increase in tax receipts in the Cebr analysis comes from stronger activity through the supply chain, not from higher excise collections. Supporters of the proposal say that makes the measure easier to frame as a targeted way to stimulate sales in pubs while also supporting brewers that rely on the licensed trade.

The government has not yet said whether it will change Draught Relief in the budget. Until then, the Cebr figures are likely to be used by brewers, pub operators and trade groups trying to make the case that a narrower tax change in one part of the drinks market could have wider effects on output, jobs and public revenues.