Changes to beer duty rules: what this means for UK brewers


Paul Cochrane

Paul Cochrane

Tax Director


In July 2020, the Treasury announced changes to the Small Breweries Beer Duty Relief Scheme (SBR) which is expected to increase the rate of beer duty paid by the smallest brewers in the UK. In this blog, Paul Cochrane, Tax Director, gives an overview of what we know so far.

What is Small Breweries Duty Relief (SBR)?

SBR was introduced in 2002 to take account of small brewers’ relatively high cost of production vis-à-vis large brewers.

Brewers with annual production under 5,000 hectolitres (hl), which is nearly 880,000 pints, receive a 50% discount on the rates of beer duty they pay to HMRC. The relief tapers off with increased production so that brewers who produce between 5,000 hl and 60,000 hl receive some relief, and those who produce more than 60,000 hl pay the full rates of beer duty.

Calls for reform

Brewers’ groups across the UK have called for reform of SBR because they consider that the taper reduces relief too dramatically for small brewers who only just exceed the 5,000 hl threshold – describing it as a cliff edge.

For example, the relief halves to 25% for brewers who produce 10,000 hl who, it is felt, will still not enjoy significant economies of scale at that level of production. Some feel this prevents small breweries from growing, as increased output results in disproportionally higher duty rates being applied to all their beer.

Proposed changes

The Treasury’s announcement contains very little detail other than that the relief will begin to taper for breweries with production over 2,100 hl. This means that smaller breweries will pay more beer duty in future. However, the rate at which the relief is withdrawn is expected to be reduced so that the ‘cliff edge’ effect is mitigated. The move could therefore prove popular with larger craft brewers who may regard the changes as an overdue levelling of the playing field. 

Details regarding when the changes will be introduced have not yet been announced but changes to SBR is not expected before 2022.

A number of Scottish brewers in our network have shared their feedback about this:

The Origin Beer Company will be producing beer in Leith for the first time in January 2021. 

"The Origin Beer Company will be producing beer in Leith for the first time in January 2021. Whilst not fundamentally opposed to the introduction of a tapered level of duty to avoid the 5,000 hl cliff edge, the reduction of SBR to 2,100 hl without announcing the tapering arrangements above this level creates great uncertainty in our planning and is therefore very unwelcome. We have always intended to get above the 5,000 hl level and to put in place a plan for this transition. However, we recognise that for many brewers, wishing to operate between 2,100 hl and 5,000 hl, this change could significantly impact their already compromised profitability and their ability to invest in their product and processes. We urge the government to provide greater clarity on its proposals as soon as possible and to ensure that they do not stifle this vibrant and important part of the brewing industry."

Finlay Heslop, Director, The Origin Beer Company

Without the Small Brewer’s Relief Scheme Stewart Brewing would simply not have been able to establish themselves firmly as a pioneering, local craft brewery, supporting 30 jobs. 

"Without the Small Brewer’s Relief Scheme Stewart Brewing would simply not have been able to establish themselves firmly as a pioneering, local craft brewery, supporting 30 jobs. The “cliff edge” above 5000 hectolitres, where the relief is withdrawn, is indeed very difficult to overcome, but any attempt to smoothen it by penalising brewers that are smaller than 5000 hl seems an odd way to deal with the problem. It would seem only fair that small brewers have the same chances and opportunities as other brewers have had, over the last 15 years since it was introduced. We would not support any scheme that made it more costly for brewers under 5000 hl to survive and thrive. Small craft breweries are at the heart of creativity and community and should be protected. The duty relief scheme is pivotal to this."

Steve Stewart, Founder & Managing Director, Stewart Brewing

Contact us

Johnston Carmichael run a helpline for brewers known as the ‘hopline’. To discuss the changes mentioned in this article, or if you’d like to talk to one of our brewing specialists about industry issues such a strategy & growth, funding, or licencing, call 0808 141 0013 or email brewing@jcca.co.uk.