Reverse the change to Small Brewers Relief.

The Treasury has announced changes to Small Brewers Relief (SBR) – the progressive tax system that has revolutionised UK brewing. These changes will reduce the 50% duty threshold from 5,000hl to 2,100hl: small breweries will have to pay more duty, whilst larger breweries could pay the same or less.

Those that will have to pay more do not know by how much as the consultation has been delayed until the Autumn. This is creating grave uncertainty for many small breweries at a time when the industry is trying to survive the Covid-19 crisis.

We believe the Treasury should not reduce relief for any brewers below 5,000hl and should reverse its decision to reduce the threshold to 2,100hl, and that these changes are threatening closures, innovation, competition, local jobs, investment and consumer choice.

The Government has been reviewing Small Brewers Relief (SBR) for the last two years in response to feedback from brewers that it was not working as intended. The changes recently announced will ensure that the scheme remains fit for purpose in the long run. The scheme will remain one of the most financially generous in Europe, and over 80% of brewers will be unaffected as they produce less than 370,000 pints a year (2,100 hectolitres).

Small Brewers Relief (SBR) was introduced in 2002 and provides small independent breweries with a discount off their beer duty bills. Currently, brewers receive 50% off until they reach 880,000 pints (5,000 hectolitres) annual production, when a formula tapers the relief down to 0% at 10.5 million pints (60,000 hectolitres). This taper reduces rapidly, meaning a brewer at 1.3 million pints (7,500 hectolitres) receives only 33% off.

For many years, brewers have highlighted that flaws in the scheme’s design cause unintended consequences such as making it hard to grow beyond the 880,000 pints level. The Treasury therefore announced at the 2018 Budget it would review the relief.

As part of this review, we have received and considered responses from over 300 breweries who get SBR. There were a range of views about the right way forward for SBR, and no industry consensus.

In July, we announced that in response to this evidence, we would reform the scheme by abolishing the current scheme taper and replacing it with a more generous one that would start at 370,000 pints (2,100 hectolitres). We also announced we would convert the scheme to a cash basis, to be reviewed annually, and will consult on the potential for a grace period for breweries that merge.