The UK Treasury’s record tax increase on the whisky industry in 2023 has backfired. A report shows a daily loss of almost £500K for the Treasury department compared to the previous year.
In 2023, the UK Treasury Department increased the general consumption tax on whisky to increase income and budget power. However, since introducing the 10.1% excise tax hike, the Treasury has experienced significant revenue loss.
According to a report by HMRC, the tax increase has produced the following impacts.
- a £225 million reduction in spirits duty revenue between August 2023 and November 2024,
- massive reduction in consumer spending on whisky and other alcoholic beverages
- Closure of small distilleries or scaling down of production
Scotch Whisky Tax Increase Backires on the UK Treasury
Likewise, the Treasury’s additional 3.66% tax increase in October 2024 did not help. Government revenues tumbled by 3.6% in November 2024 compared to November 2022.
Mark Kent, chief executive of the SWA, highlighted the financial strain on the industry and its consumers.
“Yet again, the industry has been proved right about how hiking tax rates leads to less revenue and stalls growth. We are not crying wolf – HM Treasury needs to understand that even this resilient industry cannot be stretched beyond breaking point.”
Negative Impact on Consumers and the Whisky Industry
The whisky industry was still recovering from an export tax imposed by former US President Donald Trump. This has further crippled the industry, making it less able to compete in international markets.
“The commitment made by the Prime Minister to ‘back Scotch producers to the hilt’ was broken by the decision to further increase duty on the industry,” Kent stated.
Although industry and business leaders have lobbied the government to roll back the excise taxes, the UK Treasury Department has not provided any positive signals.
“The one lever which the UK government directly controls is the rate of excise duty, where support can make all the difference in deciding to invest in the UK, creating jobs, and boosting our domestic supply chain. The UK government should commit to supporting the industry and not further raising duty on Scotch Whisky over this Parliament.”
