Autumn Budget 2021: Cuts announced to alcohol and air passenger duties, while the levy on fuel is frozen for the 12th year in a row
Sweeping cuts to alcohol and air passenger duties were announced by Rishi Sunak in today's Autumn Budget 2021, while the Chancellor froze the levy on fuel for the 12th year in a row.
Read our full round-up of today's big Budget announcements
From minimum wage increases to a cash boost for Universal Credit recipients, read about all of today's big announcements in our Autumn Budget 2021 round-up.
Delivering today's Autumn Budget to the House of Commons, Mr Sunak announced plans to simplify alcohol duties by reducing the number of different duties on alcohol from 15 to six. He said beverages will be taxed according to their alcohol content. "The stronger the drink, the higher the rate," he told MPs.
The rumoured 2.84p hike to fuel duty was also scrapped, with the Chancellor announcing that fuel duty will remain at 57.95p.
Mr Sunak also revealed plans to cut domestic air passenger duties by 50%, with a new £6.50 band set to be introduced for flights between England, Scotland, Wales and Northern Ireland.
Mr Sunak admitted that the current alcohol duty system is outdated and said the Government would be “taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years”.
The Chancellor spoke of five steps the Government would take to create a simpler system:
- 'The stronger the drink, the higher the rate'. In a bid to simplify the current alcohol duty system, Mr Sunak said the number of main alcohol rates will be reduced from 15 to 6 and will follow the principle of 'the stronger the drink, the higher the rate’.
While this means some drinks, such as stronger red wines or high-strength white ciders, will see a small increase in rates, many lower alcohol drinks will be taxed less. These include rosé, fruit ciders, liqueurs, and lower strength beers and wines. The changes will come into force in April 2023.
|Stella Artois (1 pint)||£3.80||£3.77||Down 3p|
|Frosty Jacks cider (750ml)||£3.70||£4.15||Up 45p|
|Kopparberg cider (1 pint)||£3.80||£3.67||Down 13p|
|Hardy's Merlot (750ml)||£7.00||£7.35||Up 35p|
|Blossom Hill rosé (750ml)||£8.00||£7.88||Down 12p|
|Buckfast fortified wine (750ml)||£8.50||£9.31||Up 81p|
|Bailey's Irish Cream (750ml)||£17.00||£16.69||Down 41p|
- Secondly, Mr Sunak said the Government would be modernising the system to reflect what and how people drink. He said: “Over the last decade, consumption of sparkling wines, such as Prosecco, has doubled. English sparkling wine consumption has increased almost tenfold. So I’m going to end the irrational duty premium of 28% that they currently pay.
"Sparkling wines – wherever they are produced – will now pay the same duty as still wines of equivalent strength.” This means the current system where still and sparkling drinks are charged at different rates will be scrapped. English and Welsh wines, compared with stronger imported wines, will now pay less.
Mr Sunak will also cut the duty on sales of fruit cider, which have increased from one in a thousand ciders sold in 2005 to one in four today.
- Thirdly, Alcohol duty on spirits, wine, beer and ciders will be scrapped tonight. Mr Sunak said the planned increase in alcohol duty on spirits, such as Scotch Whisky, wine, cider and beer, will be cancelled from midnight tonight (12am 28 October).
- Smaller brewers will pay less. The Chancellor did not stop there. Also included in his five-step plan were moves to support smaller, craft producers. Plans for a Small Producer Relief, a similar initiative to the Small Brewers Relief that gives small brewers reduced beer duty, will be introduced.
- Lastly, pubs will benefit from Draught Relief, i.e. less tax on various draught beers and ciders. For his fifth and final step, the Chancellor will support UK pubs by introducing a Draught Relief, which will cut duty on draught beer and cider by 5%. This will apply to drinks over 40 litres and will ensure pubs pay less.
Also announced in the Budget were several key changes to Air Passenger Duty (APD).
From April 2022, journeys over 2,000 miles will see APD rise from £82 to £84 for economy travellers. The rates for journeys under 2,000 miles will continue to be frozen at £13 up until 2023/24. But from April 2023, Mr Sunak has announced a new third band for ultra-long-haul flights over 5,500 miles. The current and future APD costs and journey examples are shown in the table below:
e.g. UK to Barcelona
<2,000 to 5,500 miles
e.g. UK to New York
e.g. UK to Sydney
On top of this, domestic air travel within the UK will get cheaper as the Treasury announced a 50% cut to domestic APD - which could cut the flight costs for millions of frequent travellers across England, Northern Ireland, Scotland and Wales.
Mr Sunak said: "This will help cut the cost of living, with 9 million passengers seeing their duty cut by half. It will bring people together across the UK."
A rumoured 2.84p hike to fuel duty has been scrapped by the Treasury, with Mr Sunak announcing that fuel duty will remain at 57.95p for the 12th consecutive year.
This freeze comes as UK petrol prices have hit record highs, peaking at an average of 142.94p a litre on the back of continued oil price rises.
"After 12 consecutive years of frozen rates, the average car driver will now save a total of £1,900," Mr Sunak said.
This, he said, amounts to £15 less per car to fill up, £30 less for vans and £130 less for HGVs compared to pre-2010 plans.
Motoring group the RAC says data from Sunday (24 October) shows that average prices are now at their highest levels ever recorded, surpassing previous highs of 142.48p a litre notched up in April 2012.
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