Simplifying the Alcohol Duty Repayment Interest Regulations 2025

The Alcoholic Products (Repayment Interest Rate) (Alcohol Duty) Regulations 2025 is a new piece of legislation aimed at improving the fairness and efficiency of the UK's alcohol duty system. Here's what you need to know in a nutshell:

What Does This Legislation Do?

This regulation allows HM Revenue & Customs (HMRC) to pay interest to businesses on alcohol duty repayments in specific situations. These include:

• When alcohol duty was paid due to an error by HMRC.
• When HMRC delays a repayment that is due.
• When a tribunal decides that a previously paid or secured duty wasn’t actually owed.

The interest rate for these repayments will align with rates set for other taxes and duties under the Finance Act 2009.

Why Is This Change Happening?

Previously, each type of alcohol had its own set of rules, leading to inconsistencies and administrative headaches. There was no established process for repayment interest, resulting in minimal usage. By streamlining these processes and introducing a unified digital system, HMRC aims to bring alcohol duty practices in line with other tax systems, ensuring fairness and predictability for businesses.

Implementation Timeline

The new system for alcohol duty, including the repayment interest, will take effect on 1st September 2025.

Impact on Businesses

The changes are designed to enhance the customer experience by compensating businesses more consistently and fairly. Although the legislation is not expected to significantly impact businesses or charities, it provides a more reliable framework for dealing with duty repayments.

Consultation and Feedback

While the specific issue of interest rates was not a focal point in consultations, the changes are generally seen as favorable and non-controversial within the industry. Key stakeholders have been informed about these adjustments.

Future Monitoring

The effectiveness of these changes will be evaluated as part of a broader review of alcohol duty reforms. There is no statutory requirement for a review clause, as the regulations pertain to tax provisions.

In summary, the Alcohol Duty Repayment Interest Regulations aim to create a more equitable and efficient system for handling alcohol duty repayments, benefiting both HMRC and businesses involved in the alcohol industry.