UK Spirits Industry Pressures Mount as Tax Hikes Cut Revenue and Squeeze Households

The Scotch Whisky Association (SWA) is urging the UK government to freeze the duty on spirits, arguing that recent tax increases have hurt both public finances and household budgets. The call comes after official data showed a decline in government revenue from spirits duty, despite a 14% increase in the tax over the past two years.

Mark Kent, chief executive of the SWA, said in a statement that higher spirits duty has not delivered the expected boost to government coffers. According to figures from HM Treasury released on September 19, receipts from spirits duty fell by 4.9% between April and August 2025 compared to the same period last year. This drop represents a loss of £79 million in revenue. The SWA also noted that since August 2023, when a 10.1% duty increase was introduced, total spirits revenue receipts have fallen by £700 million compared to the previous two-year period.

At the same time, new data from the Office for National Statistics (ONS) showed that public sector borrowing in August reached its highest level in five years. Borrowing rose by £3.5 million since August 2024, reaching £18 billion last month.

Kent argued that increasing taxes on spirits has led to higher inflation and greater financial pressure on consumers. “Tax increases have led to greater inflationary pressures on consumers at a time when ordinary families are struggling and being squeezed from every direction,” he said. He added that distilleries, pubs, and hospitality venues across the UK are seeing customers cut back on spending as businesses face mounting challenges.

The SWA believes that freezing spirits duty at the next Budget would help ease pressure on households and support jobs in Scotland’s spirits industry. Kent described the measure as “a simple, proven, practical step” that could also help improve public finances.

The debate over spirits duty comes as pubs across the UK face ongoing difficulties. Charlotte Nichols MP, chair of the All-Party Parliamentary Group on Pubs, recently warned that “pubs cannot survive on beer alone.” She pointed out that spirits now account for 38% of profits in the on-trade sector, highlighting their importance to pub revenues.

Industry groups argue that further tax hikes could threaten jobs and businesses at a time when many are still recovering from pandemic-related losses and grappling with rising costs. The SWA maintains that a freeze would provide much-needed stability for both producers and consumers while helping to protect an industry seen as vital to Scotland’s economy and cultural identity.

The government has not yet indicated whether it will consider a freeze on spirits duty in its upcoming Budget discussions. The issue remains under close watch by industry leaders, economists, and policymakers as they weigh options for supporting public finances without placing additional strain on households or key sectors of the economy.