Autumn Budget Submission 2026

The ask: A targeted rise in non-draught alcohol duty, delivered through a one off increase in the first financial year, and a long-term duty escalator, with pubs protected and supported through draught relief.

The fiscal benefit: An additional £1.1 billion for the Exchequer in the financial year 2027-2028, and £3.4 billion over the following five years (2028/29-2032/33) from a modest 2% above-inflation escalator on non-draught duty.

The wider benefit: This proposal would raise revenue, reduce alcohol harm, and support economic productivity, while helping to narrow the price gap between pubs and cheaper alcohol bought from supermarkets, off-licences, and online retailers.

Deliverability: This proposal can be delivered within the existing duty structure and draught relief introduced in 2023. It does not require wholesale redesign of the duty system.

Why now: In July 2026, Prime Minister Andy Burnham announced a 20% cut to business rates for pubs, clubs, and live venues, funded by higher taxation on businesses that ‘do not make a positive contribution to local communities’ – a clear statement that policy should distinguish between alcohol sold in ways that support local high streets and alcohol sold in ways that don’t. IAS’s proposal applies the same logic to duty.

IAS makes the following five recommendations to the Chancellor ahead of the Autumn Budget

Immediate fiscal recommendations

1. Increase alcohol duty on non-draught products by 10%, reflecting their greater economic and public health costs relative to on-trade and hospitality consumption.
   • Research shows that a 10% reduction in off-trade alcohol sales could boost UK gross value added by £2.54 billion.
   • This distinction is supported by publicans themselves: 62% of publicans say supermarket alcohol is too cheap, and 60% want government action to close the price gap with pubs – more support than for any other single measure to ease pressure on their businesses.
   • This builds on the existing off-trade/draught duty distinction – no new legislation is required – and revenue raised could help fund both public health investment and further support for pubs, hospitality, and the high street.
   • It could also reduce harm from rapid online delivery of alcohol, by increasing off-trade prices.
2. Maintain or enhance draught relief to protect qualifying products sold in pubs and other on-trade settings
   • This would narrow the price gap between draught alcohol served in pubs and alcohol sold predominantly through supermarkets, off-licenses and online retailers.
3. Equalise cider duty rates with those of beer of the same strength (ABV). Cider is still being treated preferentially, with a rate of less than half that of beer for the 3.5-8.4% ABV band, in which most common ciders fall, which is a clear driver of alcohol harm.

Supporting Commitments

1. Develop a long-term mechanism that ensures alcohol duty rates cover the external cost of alcohol harm to society and incentivises alcohol producers to reduce harm – potentially by reintroducing the duty escalator.
   • The government should calculate the external cost of harm (or appoint independent analysts to do so) to better inform the debate on what rates should be set to cover the cost of negative externalities.
   • Each year, duty rates should at least increase in line with inflation or earnings.Every 5 or 10 years, the mechanism should be reviewed to consider the latest evidence on alcohol-related costs to society.This would increase certainty on how duty is likely to change over time allowing businesses to plan better, and would incentivise alcohol producers to reduce the cost of harm in order to reduce tax burden at the next review.
   • Government should return to the practice of implementing duty changes within a few days to prevent producers using the lead-in period to release product from storage earlier than required to avoid paying new duty rates, a practice described by HMRC as ‘forestalling’.
2. Contribute to the development of a cross-government alcohol strategy that supports economic growth, protects the NHS and improves health and wellbeing.
   • Alcohol duty is the major fiscal measure to tackle alcohol harm and raise Treasury revenue, but would be more effective when implemented alongside a minimum unit pricing policy. This is required for off-trade products where duty increases may not be fully passed through to consumers of the cheapest products.
   • An alcohol strategy would also include measures to tackle the availability and marketing of alcohol, as well as drink driving, and improving access to treatment.
   • IAS’s long-term vision ‘A Healthier Future’ – developed with over 40 of the country’s leading researchers, clinicians, and public health advocates – sets out a blueprint for how to tackle alcohol harm in the UK.