Scottish craft brewers fear devastating beer duty hike

United Kingdom | Craft brewers north of the border fret their futures could be sunk by new tax penalties proposed by the UK government on 22 July 2020. The plan, which has yet to be fleshed out, would see the threshold for tax relief reduced by more than half from 5,000 hl to 2,100 hl in annual beer production.

While in the UK there have already been petitions demanding a government U-turn on the plan, Scotland’s Rural Economy Secretary Fergus Ewing waited until September to send a letter to his UK counterpart. In the letter, he expressed his grave concern that the change could ruin businesses already struggling under the pandemic.

No doubt, the 2002 Small Brewers’ Relief (SBR) boosted the growth of the UK’s craft brewing industry by giving any brewer producing less than 5,000 hl beer per year a 50 percent discount on beer duty. Tapered relief is offered up to 60,000 hl. Since the SBR was introduced, the number of UK breweries has risen from under 500 in 2002 to more than 2,000 in 2018.

Kicked while they are down

Fiona MacEachern, Managing Director at Loch Lomond Brewery, was quoted as saying that Loch Lomond Brewery will be marching through that 5,000 hl maximum amount next year as things stand. “In all honesty, we don’t know how much it will affect us, as much as it will the very small brewers.”

Reports say that any brewer going over the 5,000 hl threshold could be facing between GBP 8,000 and GBP 20,000 (USD 11,000 to USD 27,000) in extra beer duty per year, potentially halving its profit.

What angers Scottish craft brewers is that there are already enough concerns with Brexit uncertainties, the covid-19 effects, as well as the Deposit Return Scheme, under which businesses in Scotland will be expected to collect used drinks containers and refund customers their GPB 0.20 (USD 0.27) deposit on each one from July 2022.

Apart from craft brewing heavyweights BrewDog and Innis & Gunn, Scotland has around 130 breweries spread across the mainland and islands, providing about 8,000 jobs.