Scotch Whisky Group Urges Britain to Cut Spirits Duty After Tax Rises Failed to Lift Revenue

The Scotch Whisky Association is urging the UK government to cut excise duty on spirits in the Oct. 28 budget after a 17% increase in the tax over the past three years, saying higher rates are adding pressure on producers while failing to bring in more money for the Treasury.

The industry group, which represents Scotch whisky producers, made the case in a September budget submission and in a public campaign launched ahead of Chancellor Rachel Reeves’s autumn statement. The association did not set out the size of the cut it wants, but it asked the government to lower spirits duty and stop widening what it calls the tax gap between spirits and other alcoholic drinks.

The push comes as the industry faces weaker global demand, high domestic costs and the aftereffects of trade disputes in some of its largest export markets. In its submission, the association said jobs were being cut and investment delayed as companies dealt with higher operating costs, including taxes and regulatory charges. It argued that a tax reduction at home would give producers and hospitality businesses short-term relief while recent export gains take longer to feed through.

The association said HM Treasury collected £4.059 billion in spirits excise duty in the 2025/26 fiscal year, £94 million less than in 2024/25, despite repeated tax increases. It also said the outturn was far below earlier official expectations. Citing Office for Budget Responsibility forecasts, the group said projected spirits duty receipts for 2028/29 had been revised down to £4.4 billion in March 2026 from £6.2 billion in November 2023, a difference of £1.8 billion, or 29%, for the same year.

Those figures are central to the industry’s argument that higher rates do not automatically produce higher tax revenue. The association pointed to earlier periods when duty was frozen or cut and receipts still rose, including a 44% increase in spirits revenue between 1998/99 and 2007/08 during a long freeze, a 4% increase after a 2% duty cut in 2015, and a 20% increase during the 2017-2022 freeze. Those comparisons are part of the group’s effort to persuade the Treasury to put more weight on actual receipts than on what it describes as overstated forecasts.

A second part of the lobbying effort focuses on how the current alcohol duty system treats different drinks. The present strength-based system was introduced in 2023 under the previous Conservative government. The Scotch Whisky Association says the changes did not remove old distortions and in some cases made them larger. In the group’s figures, duty is now £33.99 per liter of pure alcohol on spirits, compared with £30.62 for wine, £19.45 for draught beer and £10.39 for cider. It says a 40% ABV Scotch whisky therefore pays about 1.7 times the duty per liter of alcohol paid by draught beer, up from 1.5 times before the reform.

The group also argues that the current structure does not reflect how drinks are consumed. It says a serving of whisky or a spirit-based cocktail often contains one or two UK units of alcohol, while an average-strength pint contains about 2.6 units, yet spirits are taxed more heavily. One of the examples in the submission compares a 25-milliliter measure of Scotch whisky at 40%, which the association says carries about 34 pence of duty, with a pint of 6.7% cider that can attract the same duty under draught relief despite containing about 3.8 units of alcohol.

That complaint is tied to the hospitality sector. The association said spirits account for 38% of alcohol profits in UK bars, pubs and restaurants, even though they represent 18% of alcohol units sold. It argues that the draught relief system favors beer and cider because standard spirits are usually sold from 70-centiliter to 100-centiliter bottles rather than from taps, leaving whisky and other spirits outside a tax break meant to help the on-trade. The group wants the Treasury either to change that relief or create a comparable route for bottle-served spirits.

The budget submission also asks the government to use its wider review of the alcohol duty system to reduce differences between categories over the course of this Parliament. As a first step, the association wants equal duty rates for all drinks in the 3.5% to 8.4% ABV band, including spirit-based ready-to-drink products. It says producers of those drinks now face an 18% tax premium against beer and a 156% premium against cider for the same alcohol content.

The tax campaign is aimed at a sector with broad weight in the Scottish and UK economies. The association says the Scotch whisky industry adds £7.1 billion a year in gross value to the UK economy and supports more than 65,000 jobs across agriculture, packaging, logistics, retail, tourism and hospitality. Of those jobs, it says more than 41,000 are in Scotland and about 25,000 are elsewhere in the UK. Around 70% of UK spirits are distilled in Scotland, according to the submission, and about 90% of the barley used by the Scotch whisky industry is sourced there. Distilleries and visitor centers drew 2.7 million visits in 2024, the group said.

The domestic market matters even for an export-heavy industry. Scotch whisky exports were worth £5.4 billion in 2025, making it the UK’s largest food and drink export, according to the association. But the UK remains the industry’s fifth-largest market, which is why the group says tax policy at home directly affects investment, pricing and the strength of supply chains.

The industry’s appeal comes as trade conditions abroad are improving after several difficult years. The association said export volumes to the United States fell 15% in 2025 after a 10% tariff imposed in April of that year hit Scotch whisky’s most valuable overseas market. It welcomed the removal of that tariff, while noting that recovery in sales may take time. It also pointed to lower tariffs in India, where the rate on Scotch whisky has been cut from 150% to 75% under the UK-India trade deal, with a further reduction to 40% planned over the next 10 years, and to China’s cut in its tariff on Scotch whisky from 10% to 5% earlier this year.