Draught relief is a lower rate of Alcohol Duty for beer, cider, wine, spirits and other fermented products under 8.5% ABV that are in a container of at least 20 litres designed to connect to a dispense system when duty becomes payable. It is applied by whoever pays the duty, usually the producer, importer or warehousekeeper, and its value reaches pubs and bars through the price of kegs, casks and bag in box products. From 1 February 2026 the main draught rate is £19.45 per litre of pure alcohol, against £22.58 for non draught beer of the same strength.
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What is draught relief and where does the law come from?
Draught relief arrived with the strength based Alcohol Duty system on 1 August 2023. It sits in Chapter 2 of Part 2 of the Finance (No. 2) Act 2023. Section 50 charges qualifying draught products at the reduced rates in Schedule 8 instead of the full rates in Schedule 7. Section 51 defines which products qualify, and sections 52 and 53 deal with repackaging. HMRC’s working guidance is section 12 of the Alcoholic Products Technical Guide.
The relief is designed around on trade consumption: product poured from a large container for drinking on the premises. That is why the rules focus on container size and dispense, and why moving draught product into bottles or takeaway containers triggers a charge at the full rate. For the overall structure of rates and small producer discounts, see Alcohol Duty small producer relief; this page deals only with the draught rules.
Which products qualify for the draught rates?
Under section 51(1) a product qualifies if it is under 8.5% ABV and, at the excise duty point, it is either:
- contained in a large draught container, or
- being transported to a place in the UK so that it can be transferred into a large draught container, for example beer moving by road tanker to be racked into kegs.
Section 51(2) adds a condition that is easy to overlook: products made in the UK by someone without producer approval under section 82 are not qualifying draught products, so an unapproved producer cannot use the reduced rate. All categories can qualify, not just beer and cider. A spirit based drink or wine under 8.5% ABV sold in a qualifying keg uses the same draught rate as beer.
If bulk product will not be transferred into a qualifying container in the UK, full duty applies at the duty point.
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What counts as a large draught container?
Section 51(3) sets two conditions. The container must:
- have a capacity of at least 20 litres, and
- incorporate, or be designed to connect to, a qualifying system for dispensing individual drinks.
Section 51(4) lists a pressurised gas delivery system or a pump delivery system. HMRC’s technical guide confirms that bag in box formats and containers using gravity dispense through mechanisms such as cask taps also count as qualifying dispense. HMRC can change the capacity or the list of systems by regulations under section 51(5).
In practice this means a standard keg or cask qualifies, while bottles, cans and any container under 20 litres pay the full rate however they are served. A container that holds 20 litres or more but is not designed for dispensing individual drinks also fails the test.
What are the draught rates for 2026 to 2027?
Rates were uprated by RPI of 3.66% from 1 February 2026, as announced at Budget 2025. Rates are per litre of pure alcohol.
| Product and strength | Draught rate | Full rate |
|---|---|---|
| All products 1.3% to 3.4% ABV | £8.58 | £9.96 |
| Still cider 3.5% to 8.4% | £8.95 | £10.39 |
| Sparkling cider 3.5% to 5.5% | £8.95 | £10.39 |
| Beer 3.5% to 8.4% | £19.45 | £22.58 |
| Spirits, wine and other fermented products 3.5% to 8.4% | £19.45 | £26.61 |
| Sparkling cider over 5.5% to 8.4% | £19.45 | £26.61 |
The relative saving is largest for wine, spirit based drinks and other fermented products, because their full rate is higher than beer’s while the draught rate is the same.
How is the duty worked out on a keg?
HMRC’s method is to multiply the litres of pure alcohol by the rate and round down to the nearest penny.
Illustration only. A brewery releases a 50 litre keg of 4.5% ABV beer.
- Pure alcohol: 50 × 4.5% = 2.25 litres.
- Draught rate: 2.25 × £19.45 = £43.7625, rounded down to £43.76.
- Full rate, if the same beer were in bottles: 2.25 × £22.58 = £50.805, rounded down to £50.80.
The draught saving on that keg is £7.04. For a 20 litre bag in box of 6% still cider, pure alcohol is 1.2 litres, so duty is £10.74 at the draught rate against £12.46 at the full rate.
A producer that also qualifies for small producer relief subtracts its small producer discount from the draught rate rather than from the full rate. The draught rate is declared on the monthly Alcohol Duty return.
Who claims draught relief?
The reduced rate is used by the person liable for duty at the duty point. HMRC lists three situations: producers releasing their own products, importers bringing products into the UK, and warehousekeepers releasing products held in duty suspension (see excise duty suspension and warehouses). The draught rate applies by default to eligible products. There is no separate claim form.
A pub, club or bar does not claim draught relief itself and pays no Alcohol Duty when it pours a pint. The relief is already in the price it pays for the keg. What the venue must not do is decant draught product into other containers for sale off the premises unless the full rate has been paid, as explained below. Any business selling kegs to other businesses also needs AWRS approval.
What happens if draught product is sold for takeaway or repackaged?
Section 52(1) treats product as “repackaged” when it is transferred to containers that are not large draught containers, other than in the course of serving a drink for immediate consumption. Pouring into a glass at the bar is not repackaging. Decanting from a keg into bottles is.
Repackaging is only allowed in two cases:
- It is authorised. The person doing it is an approved warehousekeeper or an approved producer. The duty shortfall, meaning the difference between the full rate and the draught rate already paid, becomes payable and HMRC says it should be declared as an underdeclaration on the monthly return.
- Full rate was elected. Under section 50(2) the person liable at the duty point can elect to pay the full rate on a container. HMRC says the customer should tell the supplier at the duty point that the product is for takeaway sale, and the supplier then elects for each container concerned.
Where the full rate is elected, regulation 7(3) of the Alcoholic Products (Excise Duty) Regulations 2023 requires evidence that full duty was paid to be passed along the supply chain on each supply. HMRC accepts invoices, packing lists, labels or delivery notes that clearly show it.
Repackaging outside these cases breaches section 52(2). Under section 53 HMRC can assess the duty shortfall, charge a penalty under section 9 of the Finance Act 1994, and seize the product along with any packaging or equipment used.
Where do businesses go wrong?
- Applying the draught rate to containers under 20 litres, or to large containers that are not designed for dispense.
- A taproom or bar filling growlers or bottles for takeaway from kegs that only bore the draught rate.
- Selling draught product to a customer who plans takeaway sales without making the full rate election or passing on evidence.
- Assuming the draught rate applies to products of 8.5% ABV or more. It does not.
- Calculating small producer relief from the full rate on draught products instead of from the draught rate.
Errors found after a return has been filed should be corrected promptly. Late paid duty carries late payment interest.
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Related Accountapedia entries
- The Soft Drinks Industry Levy
- Vaping Products Duty explained
- Duty and VAT on gifts and parcels sent to the UK
- Plastic Packaging Tax exemptions
- Business gifts and samples: the VAT rules
Sources
- legislation.gov.uk: Act 2023 c. 30, section 50
- legislation.gov.uk: Act 2023 c. 30
- legislation.gov.uk: Act 2023 c. 30, section 51
- GOV.UK: Section 12 draught relief and small producer relief
- GOV.UK: Alcohol duty uprating
- GOV.UK: Work out how much alcohol duty you need to pay
- legislation.gov.uk: Act 2023 c. 30, section 52
- legislation.gov.uk: Act 2023 c. 30, section 53
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.