How is alcohol duty calculated for beer in the UK?

Beer duty is charged per litre of pure alcohol in the finished product. You take the volume of beer, multiply by its ABV to get litres of pure alcohol, and multiply that by the duty rate for its strength band. Beer between 3.5% and 8.4% ABV attracts the standard rate; lower-strength beer pays less, higher-strength more.

When does a brewery pay its duty?

Duty becomes due when beer passes the duty point — normally when it leaves duty suspense to be sold. Registered brewers account for duty monthly, with the return and payment due by the 15th of the following month. Beer held in duty suspense in registered premises has not yet incurred the charge.

Breweries9 min readAugust 2026By Peter, Founder

How does alcohol duty work for a small UK brewery?

Q: What is Small Producer Relief?

Small Producer Relief reduces the duty rate for producers making under 4,500 hectolitres of pure alcohol a year, on products under 8.5% ABV. The discount tapers as production grows — the smaller the output, the bigger the reduction. It replaced Small Brewers Relief in 2023 and covers all alcoholic products, not just beer.

Q: What is draught relief?

Draught relief is a reduced duty rate for beer and cider packaged in containers of 20 litres or more designed to connect to a dispense system — kegs and casks destined for pubs. It exists to make draught beer in pubs cheaper relative to supermarket cans, and it stacks with Small Producer Relief.

Duty is the biggest single number most small breweries get wrong — not because the maths is hard, but because the reliefs interact and the record-keeping happens in the brewhouse while the return happens in the office. This is the plain-English version of how it works in 2026.

How is beer duty actually calculated?

Since the 2023 reform, all alcohol duty works the same way: you pay per litre of pure alcohol. Take the litres of finished beer, multiply by ABV to get litres of pure alcohol, and multiply by the rate for the strength band. A 30-litre keg of 4.5% beer contains 1.35 litres of pure alcohol; the duty is 1.35 times the applicable rate.

The bands that matter to most breweries: below 3.5% ABV pays a reduced rate, 3.5% to 8.4% pays the standard beer rate, and stronger products pay more. The exact rates change at Budgets — what does not change is the structure, so build your costing on litres of pure alcohol and the rest is a lookup.

What is Small Producer Relief, and do you qualify?

Small Producer Relief (SPR) replaced Small Brewers Relief. If your annual production is under 4,500 hectolitres of pure alcohol — which covers the overwhelming majority of independent UK breweries — products under 8.5% ABV attract a discounted duty rate. The discount is largest for the smallest producers and tapers smoothly as output grows, so there is no longer a cliff-edge at 5,000hL of beer the way the old scheme had.

Two traps. First, production is measured in pure alcohol across everything you make, and connected companies count together — contract brewing arrangements need care. Second, your SPR rate for this year is set by last year's production, so a growth year quietly changes next year's duty cost. That belongs in your cashflow forecast, not in a surprise.

What is draught relief?

Beer packaged in containers of 20 litres or more that are designed to connect to a dispense system — kegs and casks — gets a further reduced rate, and it stacks with SPR. The same beer is cheaper in duty terms in a cask than in a can. If you sell into both trade, your margin by pack format is genuinely different, which is why we report gross profit by format rather than blended.

When is duty actually due?

Duty crystallises at the duty point — in practice, when beer leaves duty suspense for sale. You account monthly, and the return and payment are due by the 15th of the following month. Beer sitting in tank or in your registered store has not incurred duty yet; beer that has left for a wholesaler has. Getting despatch records to agree with the duty return is exactly the kind of reconciliation that should be automatic, not heroic.

The mistakes that cost real money

Costing at the headline rate. If your pricing model ignores SPR and draught relief, every quote is wrong in a different direction.
Losing duty in wastage. Beer destroyed, returned or genuinely lost before the duty point should not carry duty — but only if it is recorded properly at the time.
Ignoring the ABV declared versus achieved. Duty follows the strength of the product; a beer that consistently ferments 0.3% above spec is quietly more expensive.
Treating duty as a year-end topic. It is a monthly cash cost, usually the largest one after payroll, and it belongs in the monthly numbers.

Who does the return?

Legally, the registered brewer. Practically, whoever holds clean production and despatch records. Our brewery clients run Breww, which tracks the duty position batch by batch; we reconcile it to the accounts and the return, so the number HMRC sees, the number in Breww and the number in Xero are the same number.

Rates and rules change. This article reflects the position as at August 2026 and is general guidance, not advice on your specific circumstances. If you\u0027d rather duty were simply handled, see what we do for breweries.