UK: Scotch whisky industry warns of stalled growth following record tax hike

Following a record tax hike on Scotch whisky costing the UK Treasury £500K per day, the industry warns of stalled growth in the sector, The Drinks Business reported on January 15.

The UK Treasury has experienced significant decline in revenue since introducing a 10.1% hike in excise duty on Scotch whisky and other spirits in August 2023, according to HMRC data. Figures reveal a £225 million reduction in spirits duty revenue between August 2023 and November 2024, equating to approximately £500,000 per day in lost income compared to the same period in the previous year.

The drop in revenue has sparked renewed concerns within the spirits industry, which has long warned against the impact of high tax rates on both consumer demand and government revenue. The Scotch Whisky Association (SWA) has criticised the tax increase, describing it as a barrier to growth for one of the UK’s most successful export industries.

November 2024 saw a 3.6% decline in spirits duty revenue compared to November 2023, despite a further 3.65% tax increase being announced in the October 2024 Budget. This additional duty, set to take effect on 1 February 2025, will see consumers paying at least £12 in tax per bottle of Scotch whisky.

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.”

The industry has faced criticism over the cumulative effect of the tax increases, with concerns that such measures undermine the Scotch whisky sector’s competitiveness both at home and abroad. The SWA argues that these tax policies contradict previous government commitments to support the industry.

“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.

The SWA also pointed out the broader economic value of the Scotch whisky industry, which supports 41,000 jobs directly in Scotland and generates £7.1 billion annually in gross value added to the UK economy.

Industry leaders have urged the government to reconsider its approach to spirits taxation, emphasising the need for policies that encourage growth and investment. Kent concluded:

“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.”

With another tax hike looming in February 2025, the industry awaits further clarity on the government’s long-term strategy to balance revenue generation with sustainable growth for the sector.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .