The UK Treasury has lost approximately £500,000 a day in tax revenue since the August 2023 increase in excise duty on Scotch whisky and other spirits, according to HM Revenue and Customs data.
Between August 2023 and November 2024, revenue from spirits duty dropped by £255 million compared to the same period the previous year, falling from £5.66 billion to £5.41 billion. In November 2024 alone, spirits revenue fell to £378 million, down from £392 million in November 2023.
Industry Calls for Halt to Further Tax Increases
The Scotch Whisky Association (SWA) has criticised the 10.1% duty hike introduced in August 2023 and the UK Government’s subsequent decision to raise the rate by an additional 3.65% in the October Budget, set to take effect on 1 February 2025.
Mark Kent, chief executive of the SWA, expressed concerns about the impact on both consumers and the industry.
“Yet again, the industry has been proved right about how hiking tax rates leads to less revenue and stalls growth,” Kent said. “We are not crying wolf—HM Treasury needs to understand that even this resilient industry cannot be stretched beyond breaking point.”
He added that the UK’s excise duty on Scotch whisky is among the highest globally, with consumers paying at least £12 in tax on every bottle.
“The commitment made by the Prime Minister to ‘back Scotch producers to the hilt’ has been broken by these repeated tax increases,” Kent stated.
Economic and Industry Implications
The SWA emphasised that the latest figures reflect an overtaxed industry already struggling to maintain growth. While the Treasury initially projected higher revenues from the tax hikes, the reality has been a decline in spirits duty income, raising questions about the policy’s effectiveness.
Kent dismissed suggestions that the revenue drop could be attributed to “forestalling”—the practice of stockpiling goods before a tax increase—arguing that the decline represents deeper issues with the current tax strategy.
The latest increase in duty will come into force next month, further intensifying the financial burden on the industry.
A Decline in Growth
Despite Scotch whisky’s reputation as a resilient global export, the SWA warns that rising taxes could undermine the sector’s long-term potential. The industry has historically contributed significantly to the UK economy, supporting jobs and generating exports. However, escalating tax rates threaten its competitive position on the global stage.
The Treasury has yet to respond to calls from the SWA and other stakeholders to pause further increases during this parliamentary term. Meanwhile, the industry continues to advocate for a more balanced approach to taxation that supports both revenue generation and sustainable growth.
As the duty hike looms, the Scotch whisky sector faces mounting pressure to navigate an increasingly challenging landscape.