Despite sweeping changes to its alcohol taxation system, the UK government saw only marginal growth in alcohol tax revenue during the 2024–2025 fiscal year.
According to the latest data released by HM Revenue & Customs (HMRC), the Treasury collected GBP 12.646 billion, a mere 0.5% increase over the previous year—amounting to just GBP 57 million more.
A Reform That Missed the Mark?
The subdued growth comes in the wake of the UK’s significant alcohol duty reform, which was first implemented in August 2023 and finalized for wines in February 2025. This reform shifted the taxation model from a category-based system to one that taxes beverages according to alcohol by volume (ABV). It aimed to simplify the structure and align tax revenue more closely with the actual alcohol content of drinks.
However, this new “strength-based” duty regime appears to have had a minimal short-term effect on revenue. Not only has it failed to deliver a noticeable increase in tax intake, but it has also introduced administrative burdens for producers and importers—especially with the full enforcement of new rules for wine in February 2025.
Breakdown by Category: Wine Leads the Way
Among all beverage types, wine and other fermented products generated the largest share of tax revenue, totaling GBP 4.735 billion, a 3% increase year-on-year. This category now accounts for 37% of total alcohol tax revenue.
Spirits followed, contributing GBP 4.164 billion, up 1%, and representing 33% of the total. Beer, however, suffered a setback, with revenue dropping by 3% to GBP 3.527 billion. Cider remained the smallest contributor, with GBP 221 million, showing a slight increase of 1%.
Together, wine and spirits now account for 70% of alcohol tax revenue, leaving beer with 28% and cider with a marginal 2%.
Monthly Volatility Persists
The data also underscores continued seasonal volatility, echoing patterns seen before the reform. December 2024 recorded the highest monthly intake with GBP 1.509 billion, while March 2025 saw one of the lowest monthly figures outside of pandemic years, with just GBP 802 million.
A notable spike in February 2025—up to GBP 1.097 billion from GBP 773 million in February 2024—was attributed to businesses preemptively purchasing stock ahead of the February 1 duty increase. However, this front-loading may have contributed to the sharp drop in April 2025, when provisional figures show a 7% year-on-year decline, with wine revenue down 9% and spirits down 13%.
A Sector in Transition
While the new tax model is still in its early stages, the initial financial outcomes challenge its effectiveness as a revenue-enhancing tool. The government’s ambition to modernize the tax regime and match it to evolving drinking habits may yet bear fruit—but for now, it appears the reform has simply shifted burdens without boosting the bottom line.
What’s clear is that the alcohol sector continues to grapple with regulatory complexity, and the full effects of the reform—on revenue, business operations, and consumption patterns—remain to be seen in the years ahead.
Source: Vinetur