Duty Policy
The Small Independent Cidermakers Association was formed as a Unincorporated Association in the 18th of July 2018. Membership is open to independent cider makers making either up to 70hl notified as exempt, or registered with HMRC as a cider maker and making less than 15,000 hl. People with close links to traditional cider making are also eligible. As a group, our principal aim is to campaign for fair duty treatment for small cider makers.
We currently we are the fasted growing cidermakers association in the UK, and the only association offering full membership to small makers on a national basis.
As small cider makers our interests are not the same as the interests of large cider producers and so we are not affiliated to the National Association of Cider Makers, we are the only independent voice for small cider producers.
Our Duty policy is :
1) That the 70hl exemption from registering with HMRC as a cidermaker remains unchanged. This has no financial impact for the Treasury
2)That Registered Small Independent Cidermakers making less then 15,000hl
per year benefit from the introduction of a Small Cider Duty Relief Scheme (SCDRS).
3)That SCDRS matches the Small Brewer Duty Relief Scheme and provides a 50% duty discount on the first 5,000 hectoliters of cider
4)That this tapers from 5,000 hectoliters to 15,000 hectoliters noting that this is a much smaller benefit range than that enjoyed by brewers.
5)That this discount applies to all cider duty types and bands
6)That Sparkling Cider duty bands are now harmonized with Still Cider bands
7)That a new Sparkling Cider band at 6.9%ABV to 7.5%ABV is introduced to facilitate this
The potential value of this support to the cider industry is estimated by us to be in the order of £9.6 million pounds a year. However this is not the cost to the Treasury as our figure anticipates that the new structure will produce growth in the craft cider sector eventually growing to 6% of the UK cider market, matching the comparable share of the beer market enjoyed by Small Brewers.
The EU has variously calculated €7 million as the cost of the duty lost in the UK by the implementation of SCDRS. This being so then we anticipate that there would be a small net gain to the Treasury through our proposals. We think that this has proved to be the case with the much larger Small Brewers Duty Relief Scheme.
The growth in craft cider, will have a beneficial impact on employment. We anticipate that the new duty structure will, over 10 or 20 years, produce 300 to 400 new regional craft cider producers, producing between 500 to 15000 hl, with an average of 1352hl, creating 2500 new full time jobs in the industry with another 1000 in ancillary industries and orchard management.
Of particular importance the new duty structure will protect our rural environment by preserving in the order of 7500 acres of existing cider orchards. This would make a significant contribution to the environment and protect many orchards currently becoming surplus to the requirements of large industrial manufacturers as they move increasingly into “fruit ciders” (really made wines).
Cider and Perry Excise duty historically benefited from a simple singe rate structure that recognized the agricultural roots of cidermaking. Over the years this simple system has been amended to take address perceived abuses in cider production. The latest of these changes being the introduction of a new cider and perry duty band at 6.9% ABV to 7.4% ABV.
Whist we are sympathetic to the problems that high strength low price alcoholic products cause, we do not support this new duty band. We believe that the new duty rate will have the unintended consequence of adversely affect traditional cidermakers.
We believe a better solution would be to amend HMRC Notice 162 so that cider and perry are defined as being made from fresh apple and pear juice and to not allow the use of concentrated apple and pear juice in cider or perry fermentation.
Cider or perry made by fermenting reconstituted fruit juice is a rapid process entirely dissimilar to the annual production methods of traditional cidermaking. It is a much cheaper production method requiring a much lower investment in fermentation vessels and other equipment and offering a much higher return on capital. Given these financial benefits it is hard to see why cider produced in this way should benefit from the reduced rates of cider and perry duty.
Almost all of the abuses of low priced high strength cider are products produced from concentrated apple juice. We believe that these products should be classed as Made Wine and taxed as such. This change would bring a net benefit to the revenue of approximately £250 million per annum in increased revenue.
The fasted growing sector of the industrial cider market, fruit flavoured ciders are already taxed at this rate, and that this segment is expected to soon account for 50% of cider sales we don’t expect this change would have a detrimental effect overall but would impact on the cheapest end of the market, where that result would be desirable.
We appreciate that our proposal to class cider made from concentrate as made wine is unlikely to be taken forward, but we include the point to illustrate that the new 6.9%ABV to 7.4ABV band unfairly penalises traditional cider producers who are not the real targets of this new duty band.
The Small Cider Duty Relief Scheme is the best way of addressing the unfortunate impact of the new duty band on traditional cider and perry makers.