Alcohol price and duty

Despite alcohol consumption in the UK declining overall since the mid-2000s, rates of alcohol-related illness, injury and death remain stubbornly high. This is because only looking at the average consumption in the population hides the significant proportion of us who are drinking heavily. More can be done to reduce the avoidable harms resulting from alcohol and managing the price of alcohol is an important part of that work.

The consumption of alcohol is linked to harm. When we drink more alcohol, it can impact our health and wellbeing. From headaches and poor sleep to hangovers and anxiety, alcohol affects so many of us in so many ways. It can also lead to other long-term health conditions, including liver disease, high blood pressure, stroke, depression, and cancer. The impacts of alcohol go beyond the individual who drinks too, rippling out to our families, friends, communities and wider society. From problems in our relationships and lost days at work to road traffic accidents from drink driving to domestic violence.

International evidence shows that the consumption of alcohol is sensitive to changes in affordability. The relationship between price and consumption is complex and subject to a range of varying ‘elasticities’ and switching behaviours. [1] However, in broad terms, when alcohol is more affordable, more is consumed; when alcohol becomes less affordable, less is consumed. [2]

Alcohol is now 74% more affordable than it was in 1987 when compared with average household income. [3] Alcohol has become 14% more affordable since 2010. [4] Most alcohol is purchased from supermarkets and off-licences, where the affordability of beer rose by 188%, and wine and spirits by 131%, between 1987 and 2018. [5] During the ‘cost of living crisis’ in the UK, the cost of beer, wine, and spirits has fallen, after adjusting for inflation. [6]

The UK's Chief Medical Officers recommend that people should drink no more than 14 units of alcohol per week, spread evenly across the week. To put this in context, it currently costs just £5.20 to buy 18.8 units of alcohol, almost five units more than the UK Chief Medical Officers recommend consuming in a week. [7] People drinking above the low-risk guidelines account for 68% of total alcohol sales revenue, with the heaviest drinking 4% of the population accounting for nearly a third of sales. [8] This demonstrates the alcohol industry’s reliance on heavy drinking.

The World Health Organization recommends raising the price of alcohol as one of its three ‘best buy’ policies: the most cost-effective, well-evidenced solutions to alcohol harm. [9]

Raising the price consumers pay for alcohol will, on average across the population, reduce consumption and therefore reduce harm. Evidence shows that a 10% increase in the price of alcohol would lead to a 5% decrease in consumption. [10]

People who drink more heavily are more price sensitive than people who drink moderately, especially when the price of cheap alcohol in the off-trade increases. [11] This means they are more likely to change their consumption when prices increase.

In Scotland, where the government introduced a minimum price of 50 pence per unit, the heaviest drinking households reduced their purchasing of alcohol by the greatest amount. [12]

The benefits of pricing policies are not just to the individual’s health. Research has shown that policies to increase the price of alcohol could decrease road traffic accident deaths, [13] sexually transmitted infections [14] and episodes of violence and crime, [15] all of which can affect people other than the person who consumes alcohol.

There are many ways that government can influence the price at which alcohol is sold. These include banning below-cost sales, which is already used in the UK, and restrictions on price promotions of alcohol such as ‘buy one get one free’, which is in place in Scotland.

The two most-recommended and cost-effective ways [16] that the UK could raise the price of alcohol are through alcohol duty (taxation) and minimum unit pricing (MUP).

Historically, UK alcohol taxation, usually referred to as ‘duty’, has been used to adjust the price of alcohol. This is a type of tax paid by companies that produce alcohol. Raising alcohol duty can reduce alcohol harm by:

• Increasing the price of alcohol, which has become more affordable compared to food and other drinks. Cheaper alcohol leads to an increase in consumption, which increases harm at both an individual and population level. [17] Increasing the price will decrease purchasing, consumption, and subsequent problems. [18]
• Providing tax receipts which can be used to cover the costs of alcohol harm through funding prevention, treatment, and public services. Cutting the real terms alcohol duty rates in the Spring 2024 Budget was estimated by the Government to cost the Treasury £1.7 billion between 2024-2029. [19]
• Encouraging producers to reformulate their drinks to lower their strength, which is better for public health. Alcohol producers are sensitive to duty threshold and reformulate their products in line with these. Both the 8.5% and 3.4% thresholds have seen producers reducing ABV or stopping production of higher strength products. [20]

In the UK, the default policy is for taxes to rise with inflation each year, unless the Chancellor specifies otherwise in the budget. [21] This stops the value of the tax being eroded. However, since 2012, alcohol duty has been frozen or cut in most years. This has had a negative impact on Government income and public health. Cuts to alcohol duty cost the Treasury over £23.9 billion between 2013-2028, when compared with raising duty in line with inflation. [22] Modelling by researchers at the University of Sheffield estimated that alcohol tax cuts between 2012-2019 led to an additional 1,969 deaths and 61,386 hospital admissions in England alone. They also estimated that these policy changes widened health inequalities. [23]

In August 2023, there were changes to the duty system in the UK, which made duty across different drinks more consistent by taxing based on strength (ABV). The changes also increased duty in line with inflation, in contrast to the cuts and freezes of the previous decade. [24] Alcohol Change UK supports these changes as linking duty to strength is better for public health.

However, even after these reforms to the duty system, alcohol duty is still lower than it has been for most of the last 40 years. [25] In addition, the strength at which the higher tax rates begin (8.5%) is far too high. This should be lowered to 6.5%, as 6% is widely considered a strong beer or cider. A pint of 6.5% cider or beer contains 3.7 units. Drinking four of these would take someone over the UK Chief Medical Officers’ weekly guidelines for lower risk alcohol consumption. Consequently, drinks at this ABV should be treated as higher strength from a public health perspective. The new duty system also continues the outdated practice of ‘cider exceptionalism’, by which cider is taxed at lower levels than other drinks of the same strength. Bringing cider rates in line with beer would enable the new system to function much better as a public health tool. [26]

According to recent Alcohol Change UK polling, 51% of respondents would support increasing alcohol duty. For the public health objectives of the recent duty changes to be met, the policy must target cheap, strong drinks, as these have been shown to be particularly harmful. [27]

One of the main criticisms of duty is that, because it increases the price of alcohol, it could unfairly impact on poorer people. However, research from the Institute of Alcohol Studies has shown that there is little difference between better and worse off households in terms of the share of their income or expenditure which goes towards alcohol duty. [28]

1995 – 2007: There were very few duty rises, and they were not high enough to account for inflation, meaning affordability increased

2008: Duty escalator introduced, 2% above inflation every year

2013: Duty escalator abolished for beer

2014: Duty escalator abolished for wine

2014: Some duty increases to wine

2020: Government published a call for evidence for a review of the alcohol duty system. Read our response to the consultation here.

2021: Government published a proposed new alcohol duty system at the Autumn Budget, based on the evidence submitted in 2020. The proposed system simplified the rates and linked duty to strength across all types of alcohol for the first time.

2023: Changes to the duty system made duty across different drinks more consistent by taxing based on strength. The changes also increased duty in line with inflation.

2024: Alcohol duty rates were frozen in the Spring Budget.

In September 2024, Alcohol Change UK provided a written submission to HM Treasury on taking action on alcohol harm as part of the Autumn Budget 2024.

Alcohol Change UK is calling on the Government to:

• Commit to uprating duty rates each year at 2% above inflation by reintroducing the alcohol duty escalator as a long-term measure, until duty receipts match the costs of alcohol harm. The escalator was a positive and effective policy of the previous Labour Government. It creates certainty for both the Treasury and the industry. It ensures that any benefits of the new strength-based duty system are not eroded over time. It ensures that the country receives back from the alcohol industry a higher proportion of the social and economic costs that it creates. And by linking it to the cost of harm, it creates a robust financial incentive for the alcohol industry to take real action to reduce alcohol harm.
• Lower the threshold for higher tax rates to 6.5%
• End ‘cider exceptionalism’ by bringing the duty rates for cider in line with other products of the same ABV

A minimum unit price (MUP) is the lowest price for which a single UK unit of alcohol may be sold. Modelling research from Sheffield University has found that introducing MUP across the UK would significantly cut alcohol-related deaths and illnesses. [29]

In the UK, both Scotland and Wales have an MUP, but England and Northern Ireland do not.

In Scotland, MUP was initially set to 50p per unit of alcohol in May 2018. This means that a single 25ml measure of spirits could not be sold for less than 50p, a pint of regular strength beer or cider for less than £1, and most bottles of wine for less than £5.

On 17 April 2024, the Scottish Parliament voted to continue MUP beyond the end of April 2024 and to increase MUP to 65p per unit from 30 September 2024. [30]

In Wales, the MUP was set to 50 pence per unit in March 2020. The Welsh MUP policy is being thoroughly evaluated to assess not just whether it is effective in reducing alcohol harm, but also the wide-ranging impacts of the policy across society, from the effects on alcohol retailers, to effects on vulnerable groups such as children and homeless people. [25]

Setting an MUP has no impact on the price of drinks that are already sold for more than that amount, which includes most, if not all, drinks sold in pubs, clubs and restaurants. Instead, it mostly affects the very cheap strong ciders which cause severe harm to the heaviest drinkers, and drinks sold by supermarkets at a discount, including straight discounts and multi-purchase discounts.

2012: The coalition government’s Alcohol Strategy included a commitment to introduce MUP for England and Wales, which was later dropped after a change in government.

2012: Scottish Parliament passed the Alcohol (Minimum Pricing) (Scotland) Act 2012

May 2018: MUP of 50p introduced in Scotland

2018: Welsh Assembly passed the Public Health (Minimum Price for Alcohol) (Wales) Act 2018

March 2020: MUP of 50p introduced in Wales

July 2020: Northern Ireland commits to consulting on MUP within a year

January 2022: The Republic of Ireland introduces an MUP of 10 cents per gram of alcohol, which is equivalent to 67p per unit

2023: Final evaluation report for MUP in Scotland. The UK Government has said it will wait for the outcomes of the evaluations in Scotland before it considers whether to introduce MUP in England.

April 2024: Sunset clause for MUP in Scotland – Scottish Parliament voted to maintain the policy and increase the MUP 65p per unit

30 September 2024: MUP in Scotland increased to 65p per unit

March 2025 – March 2026: Sunset clause for MUP in Wales – Welsh Assembly must vote for MUP to continue

Several months after MUP was introduced in Wales in March 2020, in October 2020, Alcohol Change UK polled 1,000 adults in Wales and found that three-quarters of them knew about MUP. Of these, 10% said they were drinking less alcohol because of it. [36]

Evaluation findings from Wales show that MUP is effectively targeting the heaviest drinkers.

Since MUP was introduced in Wales on 2 March 2020, there has been an 8.6% decrease in the amount of alcohol purchased compared with England. [37]

Scotland and Wales have both felt the benefit of MUP, while Northern Ireland seeks to introduce it alongside the Republic of Ireland [38]. However, England is lagging behind. The UK government has no plans to introduce an MUP for England but reports that it will continue to monitor the impact of MUP in Scotland. [39]

We are calling on the UK government to consult immediately for MUP to be introduced in England.

Duty reform and MUP each have distinct advantages and impacts and work best to reduce alcohol harm when implemented together.

• Reducing harm. Duty reform alone cannot guarantee the price of alcohol will increase enough to decrease consumption and prevent harm, as manufacturers and retailers can choose to absorb some of the cost of alcohol duty rather than passing it on to consumers. It is not enough to protect those of us drinking most heavily either, as those drinking at higher levels are more likely to switch to cheaper alternatives than to reduce consumption when prices rise. [40] For this reason MUP complements duty by preventing the sale of extremely cheap, high strength products, even if manufacturers absorb the duty. Additionally, as most alcohol is sold in the off-trade, [41] MUP further reduces the differential between off-trade and on-trade prices, and only affects off-trade retailers like supermarkets, corner shops, and online retailers.
• Public revenue. MUP alone does not create any additional public revenue – and may risk lowering duty revenue. November 2020 research from the Institute for Fiscal Studies shows that implementing both MUP and a strength-based duty system can achieve the desired impact of reducing harm without the potential drop in revenue that results from MUP alone. [42] Strength-based, scaled increases to duty would complement MUP by decreasing consumption across the population, preventing ill health and death, and generating revenue to offset the cost of alcohol harm and fund public services.
• Changing the landscape. Alcohol Change UK welcomes the focus on public health in the most recent reforms to alcohol duty. Further reforms to the duty system as outlined above could incentivise reformulation of drinks, and both duty and MUP can encourage smaller container sizes, so these policies in conjunction can have an important impact across a whole population, including people drinking at higher-risk levels. Both policies could push alcohol producers to create, manufacture, package, market and sell less harmful products.

The greatest impact on alcohol harm would come from the combination of both MUP and strength-based, inflation-linked duty.

[1] See, for example, Gallet, C.A.: The demand for alcohol: a meta-analysis of elasticities. Aust. J. Agric. Resour. Econ. 51(2), 121–135 (2007) doi 10.1111/j.1467-8489.2007.00365.x and Wagenaar, A.C., Salois, M.J., Komro, K.A.: Effect of beverage alcohol price and tax levels on drinking: a meta-analysis of 1003 estimates from 112 studies. Addiction 104(2), 179–190 (2009) doi 10.1111/j.1360-0443.2008.02438.x

[2] Public Health England (2016) The public health burden of alcohol and the effectiveness and cost-effectiveness of alcohol control policies

[3] World Health Organization (2017) Tackling NCDs: “best buys” and other recommended interventions for the prevention and control of noncommunicable diseases

[4] NHS Digital (2022). Statistics on Alcohol, England 2021. Part 3: Affordability and expenditure.

[5] Institute of Alcohol Studies (2018) The rising affordability of alcohol

[6] Angus, C. (2024). Twitter/X post.

[7] Iceland Foods Ltd. (2024) Frosty Jack’s Cider [Accessed 18th January 2024]

[8] Bhattacharya, A., Angus, C., Pryce, R., Holmes, J., Brennan, A., and Meier, P. S. (2018) How dependent is the alcohol industry on heavy drinking in England?. Addiction, 113: 2225– 2232. https://doi.org/10.1111/add.14386.

[9] World Health Organization (2022). No place for cheap alcohol: the potential value of minimum pricing for protecting lives.

[10] See, for example, Gallet C. The demand for alcohol: a meta-analysis of elasticities. Aust J Agric Resour Econ. 2007;51(2):121–35., Wagenaar A, Salois M, Komro K. Effects of beverage alcohol price and tax levels on drinking: a meta-analysis of 1003 estimates from 112 studies. Addiction. 2009;104(2):179–90, and Dhalwani N. A Review of Alcohol Pricing and its Effects on Alcohol Consumption and Alcohol-Related Harm. JPMS [Internet]. 2011 [cited 2016 Feb 18];1(1). Available from: http://www.jpmsonline.com/jpms-vol1-issue1-pages23-27-ra.html

[11] Meier PS, Purshouse R, Brennan A. Policy options for alcohol price regulation: the importance of modelling population heterogeneity. Addiction. 2010;105(3):383–93.

[12] O’Donnell A, Anderson P, Jané-Llopis E, Manthey J, Kaner E, Rehm J et al. Immediate impact of minimum unit pricing on alcohol purchases in Scotland: controlled interrupted time series analysis for 2015-18 BMJ 2019; 366 :l5274

[13] Castillo-Manzano, J, I., et al. (2017). An assessment of the effects of alcohol consumption and prevention policies on traffic fatality rates in the enlarged EU. Time for zero alcohol tolerance? Transportation Research Part F: Traffic Psychology and Behaviour, 50(1), pp. 38-49.

[14] Stockwell T, Zhao J, Sherk A, Callaghan RC, Macdonald S, Gatley J (2017). Assessing the impacts of Saskatchewan’s minimum alcohol pricing regulations on alcohol-related crime. Drug Alcohol Rev. 36(4):492–501. doi:10.1111/dar.12471.

[15] Wagenaar AC, Salois MJ, Komro KA (2009). Effects of beverage alcohol price and tax levels on drinking: a meta-analysis of 1003 estimates from 112 studies. Addiction. 104(2):179–90. doi:10.1111/j.1360-0443.2008.02438.x.

[16] Chisholm, D., Moro, D., Bertram, M., Pretorius, C., Gmel, G., Shield, K., & Rehm, J. (2018). Are the "Best Buys" for Alcohol Control Still Valid? An Update on the Comparative Cost-Effectiveness of Alcohol Control Strategies at the Global Level. Journal of studies on alcohol and drugs, 79(4), 514–522.

[17] Sharma, A., Sinha, K. and Vandenberg, B. (2017). Pricing as a means of controlling alcohol consumption British Medical Bulletin 123(1): p.149-158

[18] World Health Organization (2022). No place for cheap alcohol: the potential value of minimum pricing for protecting lives.

[19] HM Treasury (2024). Spring Budget 2024 (HTML): Table 5.1: Spring Budget 2024 policy decisions (£)(1). [Accessed 5 September 2024].

[20] Beertoday (2024) Government urged to commit to alcohol duty review. Beertoday.co.uk [5 August 2024]; Dodds, W. (2023) Could alcohol duty changes trigger a new trend in beer? Food Manufacture [7 August 2023]

[21] Institute of Alcohol Studies (2022). Alcohol duty explained: Cuts, inflation, and public health.

[22] Institute of Alcohol Studies (2023). Spring Budget Analysis 2023.

[23] Angus, C., and Henney, M. (2019). Modelling the impact of alcohol duty policies since 2012 in England & Scotland.

[24] Masala, F. (2023). The New Alcohol Duty System. House of Commons Library Briefing Paper No. 9765. House of Commons Library.

[25] Angus, C. (2023). Twitter/X thread: alcohol duty in the UK.

[26] Morris, D., Angus, C., Gillespie, D., Stevely, A., Pryce, R., Wilson, L., Henney, M., Meier, P., Holmes, J. & Brennan, A. Estimating the Impact of Transitioning to a Strength-Based Alcohol Tax System on Alcohol Consumption and Health Outcomes: A Modelling Study of Tax Reform in England. The Lancet Public Health (online first)

[27] Holmes, J. (2017). Cheap cider and an alcohol duty system that incentivises harmful practice. Institute of Alcohol Studies.

[28] Bhattacharya, A. (2020). Who pays the tab? The distributional effects of UK alcohol taxes. Institute of Alcohol Studies.

[29] University of Sheffield, School of Health and Related Research. FAQs – Minimum Alcohol Pricing - SARG (sarg-sheffield.ac.uk)

[30] Scottish Government (2024). Minimum Unit Pricing rise.

[31] Public Health Scotland (2023). Evaluating the impact of minimum unit pricing for alcohol in Scotland: Final report A synthesis of the evidence.

[32] Angus, C. et al. (2023). New modelling of alcohol pricing policies, alcohol consumption and harm in Scotland. An adaptation of the Sheffield Tobacco and Alcohol Policy Model: Final Report.

[33] Hardie, I. et al. (2022). The impact of changes in COVID-19 lockdown restrictions on alcohol consumption and drinking occasion characteristics in Scotland and England in 2020: an interrupted time-series analysis. Addiction, 117(6), pp. 1622-1639.

[34] The COVID hangover Addressing long-term health impacts of changes in alcohol consumption during the pandemic.

[35] Welsh Government. Statistics and Research Series: Research into minimum pricing for alcohol.

[36] Alcohol Change UK (2020) Press release: One in ten Welsh drinkers report drinking less because of minimum pricing

[37] The Lancet Gastroenterology & Hepatology (2021). Alcohol-related harms and the case for minimum unit pricing.

[38] Northern Ireland Department of Health (2020) Press release: Minister Swann committed to full consultation on alcohol pricing

[39] Woodhouse, J. (2020) Research briefing: Alcohol: minimum pricing. House of Commons Library.

[40] Institute of Alcohol Studies (n.d.). Consumption: Do Brits drink more out, or at home? [Accessed 5 September 2024].

[41] Pryce, R., Hollingsworth, B. & Walker, I. Alcohol quantity and quality price elasticities: quantile regression estimates. Eur J Health Econ 20, 439–454 (2019). https://doi.org/10.1007/s10198-018-1009-8

[42] Institute for Fiscal Studies (2020) Tackling heavy drinking through tax reform and minimum unit pricing