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Government must defer £750m Beer Duty payment over COVID-19

The British Beer & Pub Association (BBPA) is calling on the UK Government to defer payments of Beer Duty due on 25 April relating to beer produced in March when pubs were forced to shut down overnight.

In addition, it is calling for a deferment of beer duty for the whole of the next quarter (April-June) to support the Brewing industry.

The trade association says the payments must be deferred as a matter of urgency to provide vital cashflow support to the UK’s 2000+ brewers.

Whilst the Government’s support for the great British pub in recent weeks has been warmly welcomed and will go a long way in helping them survive, there has been less support for the breweries that supply pubs and who have seen a huge part of their market wiped out.

The relationship between pub and brewer is symbiotic, and draught beer in particular is unique to pubs, so without one the other suffers.

With pubs now closed, 70% of the UK beer market is now cut-off to brewers and increased sales to supermarkets is not compensating for this loss.

The trade association estimates that 3 million kegs and casks of beer are produced and sold in pubs each month. As the vast majority of beer produced for March can no longer be sold due to the shutting of these pubs, the duty bill due on 25th April costing approximately £300 million should be deferred, it says.

With sales of beer in pubs non-existent for the immediate future as well, the rest of the quarter’s duty (April to June) – a total of £750m when combined with duty for beer sold in March – must also be deferred the BBPA says. This it claims will enable brewers to get back on their feet and be ready to supply pubs once the UK is through the COVID-19 crisis.

The BBPA previously called for the cancellation of March’s duty payment, but the Treasury did not take it forward. However, a few brewers were subsequently able to achieve duty deferments with HRMC, but by no means all. This makes a blanket deferral on beer duty payments due on 25 April and the whole of the next quarter even more critical, says the BBPA.

Emma McClarkin, BBPA's Chief Executive, commented, “The UK Government has rightly announced various measures to help our sector, which we warmly welcome. However, with pubs being forced to close overnight, 70% of the UK’s beer market by value has been shut off – devastating breweries across the UK. Sales of beer in off licenses and supermarkets simply cannot make that gap up.

“The Chancellor has said he will do ‘whatever it takes’ – for brewers this means an immediate deferment of the April beer duty payment for beer produced in March, and a deferment for the whole of the next of the quarter too.”