UK alcohol & beer duty updates for August 2023

[max]

I couldn’t have described it better myself!

I would add that if you need to move loads of different products at once to this non-bonded location, you can use a stock take to do so in bulk. However, if you’re only moving a handful of different products, I would recommend just keeping it simple and doing it per product as described here

[john-cussons]

Hi Guys
This is a great report any chance you could make it so that we can export the results to excel so I can do some calcs on it
Thanks
John

Sorry just seen someone else asked for this to. cheers

[rebecca-howers]

Quick question around liquid volumes allocated to the products…

You state that if a product has a GROSS liquid volume of 20L and above, it will qualify for draught relief (if we have the auto setting on, which we will). Which field is used for calculating the amount of beer to be added up and have duty applied to it? The GROSS or the TAXABLE?

[max]

Hi Rebecca - Breww will use the gross capacity to determine if a container type qualifies for draught relief, and then the duty will be calculated using the taxable volume.

[luke]

@russ-clarke and @john-cussons Good news, an export button has been added to the top-right of this report now

[russ-clarke]

Marvellous, thanks for letting us know

[max]

Hi all! HMRC updated Excise Notice 226 on Tuesday and have included seemingly new information about a transition period from Small Brewers Relief to Small Producer Relief. The exact wording in Section 8 is as follows:

SBR eligible beer produced before the 1st of August 2023 will be charged at that SBR rate even if released on or after the 1st of August 2023.

Beer production in the UK

We’re working on implementing this into Breww now, and Barry Watts at SIBA is kindly helping us clarify this scheme with HMRC beyond the single sentence they have provided above.

However, our understanding is that this means beer eligible for Small Brewers Relief that was produced before the 1st of August 2023 will be charged at the rate it would have been charged at if dispatched before the 1st of August 2023.

This means any Small Brewers Relief beer will not be eligible for Draught relief, as it is now being charged using the old rates. To ensure that your customers can take advantage of the fact your existing SBR eligible beer can’t have draught relief applied and they can therefore sell the beer for takeaway, Breww will warn you if you try and dispatch an order where you’ve specified that draught relief should apply, but the order has SBR eligible beer assigned. This allows you to then go into the order and remove the requirement to apply draught relief, so that your customer receives an invoice with the “Draught duty relief has not been applied” message displayed, allowing them to sell the beer for takeaway. Or, alternatively, you could assign non-SBR eligible stock and save the old stock for a customer who requires the full rates to be paid.

To determine when beer was produced for the purposes of this transition scheme, Breww will use the Date & Time of a packaging action. Or for any delayed racking releases with a reason of Conditioning or Maturing, Breww will use the date it was released.

@adam-henderson

From what I can tell, on the 1st of August 2023 anything passing the duty point from then on is under the new rules/rates. Even products manufactured prior to this date.

Currently we operate like most breweries and hold in duty suspension until dispatch. However, the duty on 8.5%+ beer will be up significantly for smaller producers as there is no relief anymore. Is there an easy way that I can move all of my already produced 8.5%+ stuff past the duty point before that date and leave everything else as normal?

@adam-henderson This means that what we thought was the case no longer appears to be true! So there’s no need to pay the duty on your high-strength beer if you haven’t already done so, as the transition period means you will have to pay the old rates on it anyway.

We are keeping firmly on our toes with this one, and if we receive further clarity from HMRC that requires updates from us, we’ll implement them into Breww immediately. If any clarification from HMRC requires us to make changes, but we don’t receive this clarification until during August, we will update your existing August figures accordingly if required

[john-cussons]

Thanks guys thats brilliant

[wayne-smith]

Glad to hear how quickly you guys are reacting to what is such a key piece of late information for the inept government.
We have quite a substantial barrel aged programme and as such would like to flag it "with a reason of Conditioning or Maturing " as you mentioned. Can you clarify how we do this please?

[luke]

@wayne-smith

We have quite a substantial barrel aged programme and as such would like to flag it "with a reason of Conditioning or Maturing " as you mentioned. Can you clarify how we do this please?

This is would involve racking the beer as a “Delayed racking release”. Our guide on this is at How to rack beer for bottle/cask conditioning without releasing it for sale immediately.

However, if you’re planning on leaving the beer in barrels (vessels), this might not work for you, as you likely don’t want to rack it yet. Additionally, our understanding of the regulations is that this beer needs to be ready to sell before the 1st August, not still in the production process (such as conditing/maturing). As such, even if you do rack the beer with a delayed release, you would need to have actually released it for sale before the 1st August.

If you believe our understanding of the regulations to be incorrect, please let us know (with references to the applicable parts of the Excise notice to support your understanding), and we can review. As it stands currently, Breww will only consider beer for the old duty calculations if it’s fully packaged and released for sale before the 1st of August.

In short: you can’t just mark beer that’s not finished being produced as “Conditioning/Maturing” to apply the old duty calculation method.

I hope this makes sense, but if you need any clarification, please let us know. The new regulations are not as clear as everyone would have liked, to be honest!

[max]

We’ve had further news on this! HMRC have made a U-turn on the Small Brewers Relief to Small Producer Relief transition scheme - it will no longer be going ahead.

Frustratingly, we had pushed hard to get this over the line and had successfully implemented this into Breww earlier this week. So everyone using Breww wouldn’t have had any extra admin with the transition scheme and would likely have benefitted from being able to use the old rates for their existing high-strength beer stock.

This means that you might now want to consider “constructively” removing any beer at 8.5% and above to avoid paying the higher duty rate for high-strength beer from the 1st of August. @jack-tavare described the process of how to do this well above:

@jack-tavare

Go to Settings > Sites & Locations > then click view on your main bonded warehouse site where you currently store your bonded stock. Within this site you can then create a new ‘Location’ with ‘non bonded status’ (I called mine ‘Duty Paid Stock’). From here you can now change the location of all of your products you want to pay duty on this month by going to the product page e.g. Pale Ale - 30l Keg > click the ‘Locations’ tab near the bottom of the page > then click ‘edit location’ and change the location to your non bonded location. This will then trigger the product passing the duty point and include it in this months return.

[adam-henderson]

@max where did you see this?

Ex 226 still states this:

SBR eligible beer produced before 1 August 2023 will be charged at that SBR rate even if it’s released on or after 1 August 2023.

[matt-cousins]

Hi Adam - HMRC have emailed both us and SIBA regarding it being cancelled, and SIBA have now announced to their members about the change. I would expect that HMRC will update Excise Notice 226 shortly.
Apparently, this scheme has always existed for SBR, but it’s never been applied by the industry (we’ve certainly never seen any mention of it in HMRC’s guidance).

HMRC’s email to us is as below:

Just to update you, the minister has now agreed to a policy change, under which all SPR-eligible goods which pass a duty point on or after 1 August will pay the SPR rates, rather than only those which are produced or imported into the UK on or after 1 August.
We understand that this is how industry has been managing the transition from one SBR year to another for many years, but this is not currently what the legislation says, so we will be amending that today or tomorrow.

[adam-henderson]

Pretty hilarious that they recently changed it to explicitly say that we could still use the small brewers relief scheme then a few days before told a few organisations, but not the people who actually pay the duty, that they were going back on that. (Ex 226 still says that we can use the SBR scheme as of right now)

Anyway, thanks for the update, I will go with the stock location approach.

[jack-tavare]

Hi guys

Will there be an update to the Sellar integration regarding duty relief? Sellar have released an update where the customer can select that they’d like to pay full duty on the order, without duty relief, if they’re a bottleshop/bar etc with a takeaway dispense system. Would be great if this could come be automatically applied in Breww after the order is imported.

Thanks

[luke]

Thanks Jack, this Sellar option should be being handled now They hadn’t let us know that they were adding this, so we weren’t able to do this in advance, so any orders before now won’t have had this considered, I’m afraid.

[jack-tavare]

That’s great thanks for sorting Luke.

[helen-aked]

We’ve had a communication through from SIBA that quotes the following:
“The new rate for 2024 only applies to beer produced after 1 February 2024 and not to old stock produced before this date, including beer in duty suspense. Anything produced before 1 February in the previous Small Producer Year will be charged at the brewery’s previous duty level. This means breweries need to manage their stock to record the relevant duty rates and record these different rates when completing the duty return.”
Can we assume that you guys have already done the head scratching on this?
Thanks.

[max]

Hi Helen - absolutely, we’ve got you covered here!

I’ve actually just published an article about this that provides an explanation of what is happening and a bit of background about how it has come about:

HMRC clarification on how to determine the Small Producer Relief (SPR) rate that applies

As part of the change from Small Brewers Relief to Small Producers Relief, HMRC seemed to announce a transition scheme that would mean beer produced before the 1st of August 2023 that qualified for Small Brewers Relief would be paid at the rate that applied at the time it was produced. So, rather than paying the rate that applied at the point the beer left duty suspense, it would instead be paid at the rate that applied at the point it was produced. You can read our update from the time here: UK…

But the short answer is that if you use Breww to calculate your duty returns, you have nothing to worry about. We’ve already updated Breww to support the latest change.