Lockdown alcohol sales set to give Treasury an extra £800m

Harriet Line, PA Deputy Political Editor

Bumper alcohol sales in supermarkets and off-licences during the coronavirus lockdown will give the Treasury an extra £800 million in duties, the fiscal watchdog has forecast.

The Office for Budget Responsibility (OBR) said the sales have “more than offset” the loss in alcohol tax receipts from the closure of pubs and restaurants for large parts of the year.

It said that alcohol duties have been revised up by £0.8 billion – or 6.6% – this year relative to its March 2020 forecast.

“Total receipts have held up as alcohol consumption has been one of the few tax bases unscathed by the virus,” the OBR’s report published alongside the Budget explained.

“Higher sales in supermarkets and other shops have more than offset the loss in receipts from the closures of pubs and restaurants for large parts of the year.

“A compositional change to the underlying streams of alcohol duties is assumed to persist in the medium term with a slight shift towards wine and spirits, of which sales in supermarkets and other shop sales form a greater proportion, and away from beer and cider.

“The one-year freeze in alcohol duties next year announced in the Budget lowers receipts by £0.3 billion a year on average from 2021-22 onwards, leaving receipts down modestly relative to both our March and November forecasts over the medium term.”