Scotch Whisky is trapped in a tax riddle
The UK’s nonsensical spirit tax regime is an own goal that punishes industries like Scotch Whisky, writes Mark Kent
Why should a drink with three times the calories and twice the alcohol content pay only half the tax? That’s not a riddle – it’s the current reality of the UK’s duty system, where spirits like Scotch Whisky are unfairly penalised while beer gets an easier ride.
This isn’t just about numbers – it’s about fairness, common sense and economic opportunity. Right now, Scotland’s national drink, a world-renowned export, is being taxed under a flawed system that doesn’t reflect modern drinking habits or economic logic.
Two years ago, the government overhauled alcohol duty. Spirits were hit hard, with tax rising by over 10 per cent. Then came another hike in October 2024, tied to inflation. The result? A punishing blow, not just to the Scotch Whisky industry – one of the UK’s most valuable economic assets – but to the public purse, too.
The justification? To raise more money for the Treasury. The reality? It’s backfired. The Office for Budget Responsibility forecasted £4.8bn in alcohol duty revenues for 2024/25. HM Treasury ended up over £600m short – and yet, the orthodoxy in Whitehall remains unchanged.
When spirit duty is cut, revenues go up
Here’s what we do know: when spirits duty is cut, revenues go up. But instead of learning from that, the Treasury clings to an unsubstantiated model that chokes off investment, risks jobs and stunts growth in one of the UK’s most dynamic export industries.
Meanwhile, Europe is leaving us behind. The UK has the fourth-highest spirits duty in Europe, with rates more than double those in Germany and Portugal, and four times higher than in Italy and Spain. Is it any wonder that countries like Spain are seeing their hospitality sectors thrive, while the UK’s faces closures and job losses?
The Scotch Whisky industry contributes over £7bn to the UK economy each year. That’s not just heritage – it’s hard economic power. And with a fairer duty regime, it could do even more.
This autumn, the UK government has a golden opportunity. It claims economic growth is its top priority. If that’s true, then the Chancellor must start by backing a home-grown success story that supports thousands of jobs, drives exports and fills Treasury coffers.
It’s time to stop punishing success. It’s time for a fair deal for Scotch.
Mark Kent is chief executive of Scotch Whisky Association