Small Brewers Relief - www.rossmartin.co.uk

What is Small Brewers Relief? How do you know if your beer falls under Small Brewers Relief?

This is a freeview 'At a glance' guide to Small Brewers Relief.

Budget 2020 announced a review of how Small Brewers Relief (SBR) was structured. The outcome of this review was published in November 2021. At that time:

The SBR permitted small brewers to tax relief on the General Beer Duty Rate based on output.
Brewers producing under 5,000 hectolitres (hl) or 880,000 pints received a 50% duty discount.
The discount was tapered for production above 5,000hl so that the full standard duty rate was applied for production over 60,000 hl.

The review considers reforms to the current structure to encourage growth. The tapering allowance above 5,000hl is widely regarded as a ‘cliff-edge’.

Small Brewers Relief was replaced by Small Producer Relief from August 2023 under a new alcohol duty system.

At a glance

Small Brewers Relief (SBR) was introduced in 2002 and was based on European legislation, specifically EU Directive 92/83/EEC.

It allowed reduced rates of duty, of no more than 50% below the standard rate, to be applied to brewers producing up to 200,000hl per year. The UK limited relief to production of up to 60,000 hl.

The government introduced SBR for three reasons:

To encourage small brewers and allow them to compete with larger producers who have better production economies of scale.
Help small brewers bring their goods to market.
To encourage and maintain diversity within the beer industry.

What's new?

Budget 2020 announced a Review of Small Brewers relief. The Summary of the reviewed consultation included these main proposals:

Replacing the existing taper with a more gradual one, starting at 2,500hL production.
Providing a three-year grace period for breweries that merge so that the relief phases down rather than potentially ending overnight.
Linking SBR to the alcohol content of the beer, and extending it to beers below 2.9% alcohol by volume (abv).

At Autumn Budget 2021, the government announced as part of its Alcohol Duty Review that it would introduce a new Small Producer Relief that would supersede SBR. This was legislated for by Finance (No 2) Act 2023 alongside a new alcohol duty system. See Small Producer Relief (alcohol)

How Small Brewer's Relief worked

How do you know if your beer falls under Small Brewer’s Relief?

You must be registered as a brewer before you start brewing unless you’re covered by an exemption. A Certificate of Registration will be issued. Registration covers:
- Production of beer.
- Holding of beer in duty suspension.
- Classes of beer that may be held.
A separate registration is required for each premise in which beer is produced.
As an existing brewer with a single brewery not connected with other breweries, you must satisfy all of the following conditions for the beer you produce to qualify as small brewery beer:
- No more than 60,000 hectolitres of beer may have been produced in your brewery in the previous calendar year.
- Less than half of the beer produced in the brewery in the last calendar year may have been produced under licence.
- You must reasonably estimate that in the current calendar year your brewery will produce no more than 60,000 hectolitres of beer.
As an existing brewer connected to other small breweries you must satisfy all of the following conditions for the beer produced in your brewery and any connected breweries:
- No more than a combined total of 60,000 hectolitres of beer in your brewery and any connected breweries may have been produced in the previous calendar year.
- Less than half of the beer produced in your brewery or any connected brewery in the last calendar year may have been produced under licence.
- You must reasonably estimate that in the current calendar year your and any connected breweries will produce a combined total no more than 60,000 hectolitres of beer.

This means that if one brewery in a group of connected breweries has licensed production of 50% or more, the whole group is excluded from the scheme. The licensed production in each individual brewery must be less than half of the total production of that brewery.

Reasonable estimates

Brewers must make annual estimates accurately. HMRC expect brewers to take into account contracts and any expansion plans. If you make an untrue estimate by stating the brewery will produce 50,000 hectolitres in the current calendar year when you know that a reasonable estimate would be 70,000 hectolitres, HMRC can recover all of the duty underpaid.

Brewers must provide estimates when you apply for registration.
You do not need to notify HMRC of subsequent estimates.
You must record in your business records of each calendar year’s estimate at the time you make it, together with details of how you arrived at the estimate.
This information must be kept in the form of a Beer Production Account.

Exclusions

Beer produced under licence is never regarded as 'small brewery beer'. It is always liable to the standard rate of duty. In order to determine whether or not production is licensed, the following factors will be taken into account: