Micro breweries ‘risk going out of business’ due to government tax change, warns MP

Micro breweries ‘risk going out of business’ due to government tax change, warns MP

by Malcolm Hindle (July 2020)

A CHANGE to beer duty for microbreweries “risks putting some out of business,” claims Sefton Central MP Bill Esterson.

The politician said he has been contacted by brewers in Sefton who were dismayed at plans to lower the threshold for small brewer duty relief from 5,000 hectolitres (HL) per year to 2,100HL.

The changes mean some small breweries will pay more tax, and there will be a disincentive for others to grow their businesses. Currently brewers pay only 50% of the normal duty on production up to 5000HL.

Les O’Grady, director and head brewer of Neptune Brewery in Maghull, told the MP: “This will have a drastic influence  on the craft brewing industry in this country. There has been a rapid increase in micro breweries operating in all regions bringing innovative and exciting products to market and creating jobs helped in the main by small brewer duty relief.

“The brewing industry  has been hit hard by the COVID pandemic  and there has been little in the way of assistance helping us on the way out as well.

“At present Neptune Brewery is under the 2100HL per year margin but with year on year growth and investment in new equipment we have the capacity to go above. However, with the new proposals there is no financial incentive to do this, ultimately we will work harder with no end reward.”

Mr Esterson said: “This will have a massive impact  on the craft brewing industry. Micro breweries  help bring new products to market and create jobs, and this is helped by the duty relief that small brewers can claim.

“By lowering the threshold the government risks stagnating the creative side of the industry. Where is the incentive to innovate and take chances?

“By paying a higher rate of duty, small breweries, without the economies of scale  of the bigger breweries, will see their margins squeezed. It will lead to  higher  costs to the trade and ultimately the customer.

“It is likely to affect  consumer choice and quality through the  impact on innovation. Of immediate concern is the loss of jobs in the industry and the closure of businesses both in brewing and in retail.

“I have written to the Chancellor to raise my concerns and those of the micro brewers in my constituency. He needs at the very least to delay this until the economy and industry has had the chance to recover. This is the precisely the wrong measure at precisely the wrong time.”

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