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London’s famous distilleries have warned they are being “crushed” by Government tax hikes. Duty on spirits was increased by 3.65% in Labour’s 2024 October Budget, and by 10.1% under the previous Conservative government in 2023. Spirit distillers in the capital fear another rise could be on its way as Rachel Reeves’ Autumn Budget looms and are calling for a freeze to protect the industry and jobs. Owners and co-founders of the North London-based distillery Sacred Spirits, Ian Hart and Hilary Whitney, told The Standard that alcohol tax is “crushing” small distilleries, pubs, bars and restaurants. Established in 2008, Ms Whitney and Mr Hart began their distillery business in their kitchen before opening a shop in Highgate in 2020. Together, they produce around 500 bottles of gin a week. For each bottle of gin above 22%, the duty rate stands at £32.79 per litre of pure alcohol. “The UK’s duty rates on alcohol are the highest across the G7”, said Ms Whitney. “70% of what you pay for a bottle [of gin] goes to the Exchequer.” She added: “The government considers that the alcohol business is not an everyday essential so it’s an easy way to collect money”. However, the increase means small distilleries are forced to put up the cost and are eventually priced out of the market, she said. Around one in four pubs have a distiller supplier that has gone out of business because of the duty increases, according to campaign group UK Spirits Alliance. Mr Hart explained that the beer and cider industries are not subject to the same duty, calling the rise “discriminatory”. Duty on draught beers has been cut, and small beer producers have been handed a tax break. Spirits are currently being taxed at 16% more per unit of alcohol than wine and 256% more than cider. Ms Reeves cut by 1.7% from draught duty during her last Budget, knocking a "penny off a pint in the pub". But Ms Whitney noted that a measure of gin is the equivalent of a pint of beer in alcohol but is not taxed as such. Vermouth, a fortified wine, is also treated as a spirit under the new duty rules since the UK left the European Union. Sacred Spirits is one of the first and only distilleries to produce vermouth using English wine. “Vermouth is not a spirit. It’s a fortified wine, but we have seen an over 50% rise in duty,” Mr Hart said. Ms Whitney called the rise in duty “counterintuitive”, explaining that the cost is being passed onto pubs, making people less likely to purchase spirits. Mr Hart said: “A lot of our customers – bars, pubs, and restaurants – are suffering dramatically lower levels of business. Pubs are empty, bars are empty.” Ms Whitney added: “We need people to spend more money [on spirits] and they won’t do it, if it’s so expensive.” The cost of spirits has spiralled in recent years, with inflation on spirits doubling from 2.4% a few months ago to 4.8% today. Recent receipts from HMRC show that despite the hike in duty, spirits duty revenue is falling, down £700 million in the two years since 2023 compared to the same period before duty was raised. Ms Whitney said jobs are being lost across distilleries and the hospitality sector because of rising alcohol prices, which have risen by approximately 5.9% year-to-August, as well an increase in employers' National Insurance (NI) contributions and the minimum wage. The spirits industry supports more than 446,000 jobs, but data from the Office for National Statistics shows that the hospitality industry accounts for nearly half (45%) of all job losses since the November 2024 Budget. According to the UK Spirits Alliance, duty hikes combined with rising business rates and minimum wage increases have all stunted the growth of the hospitality sector. The Autumn 2025 Budget will be delivered on November 26.
