Small producer relief

Definition

Small producer relief (SPR) is a tax relief scheme designed to support small beer, cider, and spirit producers. 

What is the small producer relief?

The SPR was introduced to encourage the growth of small-scale alcohol producers by providing them with financial assistance through reduced duty rates.

• Beer: Small breweries producing less than 5,000 hectolitres of beer annually, qualify for SPR. This relief offers them a progressive duty discount, beginning at 50% for those producing up to 5,000 hectoliters, and tapering off as production rises, reaching its limit at 60,000 hectoliters per year.
• Cider: Small cider producers also qualify for SPR if they produce less than 70 hectoliters of cider per year. Similar to beer, eligible cider producers receive a discount on the duty they pay based on their production volume.
• Spirits: Distilleries producing less than 100,000 litres of pure alcohol per year are eligible for SPR. This relief reduces the duty payable on spirits produced by these small distilleries.

The small producer relief aims to level the playing field for smaller producers in the alcohol industry, allowing them to compete more effectively with larger companies. 

Example of the small producer relief

Let’s consider a small brewery that produces 4,000 hectoliters of beer per year. Since they fall within the threshold for SPR, they qualify for a 50% discount on beer duty.

For example, if the standard duty rate for beer is £10 per hectoliter, the brewery would owe £40,000 in beer duty without SPR (4,000 hl x £10 = £40,000).

But with SPR, they only pay half of that amount due to the 50% discount. So, their duty payment under SPR would be £20,000 (50% of £40,000), saving them £20,000 in taxes.

This reduction in tax liability allows the brewery to allocate more resources to business growth.