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Subsidy cut threatens Sheffield's small breweries

The government has proposed changes to tax relief for small-scale brewers, in a move that could hurt Sheffield's independent beer industry.

Bradfield Brewery 20 08 2020 38
Beer packaged up at Bradfield Brewery.

Cuts to a subsidy designed to help small brewers compete with multinationals could disproportionally affect Sheffield, which has a strong brewing scene.

Small Breweries’ Relief (SBR) was introduced in 2002 and allows small breweries to pay a more proportional rate of duty on the beer they produce.

A brewery making 5,000 hectolitres a year currently pays only 50% of duty that a corporate brewer like Heineken pays. This discount is tapered off until 60,000 hectolitres, at which the full duty rate applies.

The government is proposing that the lowest threshold be reduced to 2,100 hectolitres, meaning breweries making more beer will see their duty relief taper down from 50%.

"CAMRA do not believe that the proposed changes, resulting in around 150 small brewers paying more tax, are the best route to improve Small Brewers’ Relief," said Dave Pickersgill, Pubs Officer at Sheffield and District CAMRA.

"The government should be providing more support to our vibrant small brewing sector to aid its recovery, rather than planning on withdrawing tax relief from some of the smallest operators, brewers who are vital to maintaining consumer choice in the beer market."

Sheffield has 27 breweries within its city boundary, more per person than any other city in the UK. These range from established breweries, like Bradfield and Abbeydale, to those producing smaller batches of niche beer, like Saint Mars of the Desert in Attercliffe.

Supporters of SBR, including CAMRA and independent brewery body SIBA, say its responsible for an explosion in the numbers of small breweries in the UK over the past two decades.

"Without the scheme, breweries such as ours would not have been able to grow by reinvesting the duty relief back into the business, purchasing new equipment to increase our capacity, create jobs and boost the local economy," said a spokesperson for Loxley Brewery.

The government have said the changes will soften some of the cliff-edges in SBR's taper rates, that 80% of breweries will be unaffected by the changes, and that some will benefit.

But Sheffield Hallam MP Olivia Blake believes that the tax rise for the smallest breweries will hurt Sheffield's beer industry, and has put forward a Parliamentary motion against the plans.

“Covid-19 is having a huge impact on small breweries in Hallam [constituency] and across the country," she said. "Right now sales have fallen by 80% and two small breweries are going out of business every week."

"But at this critical time, when small breweries so desperately need more support, the government is proposing the opposite - cuts, which will threaten the whole industry."

Filed under: #breweries #beer

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