Draught relief is one of the most directly useful pieces of alcohol duty legislation for pub and bar operators, yet it is regularly missed in GP% models. If your pricing spreadsheet is using the packaged duty rate on your cask and keg lines, your margins look worse than they actually are.
This article explains what draught relief is, which products and containers qualify, the current duty rates, how to apply them to a real pint-pricing calculation, and what sits outside the relief entirely.
Note on rates: the figures in this article reflect the rates locked in our house positions, verified against GOV.UK Alcohol duty rates on 2026-07-12. Alcohol duty rates are set at each Autumn Budget and can change annually. Always verify the current rates against the HMRC page before finalising cost models.
What draught relief is (and the 20-litre rule)
Draught relief gives lower alcohol duty rates to qualifying products dispensed from containers of at least 20 litres. It applies to products in the 3.5% to below 8.5% ABV band, which covers session lagers, cask ales, most standard kegs, and qualifying draught ciders. Products below 1.2% ABV attract zero duty entirely.
The container threshold is a hard rule: 20 litres or more. A cask of real ale, a keg of lager, or a bag-in-box format that meets the 20-litre minimum all qualify. A 5-litre party keg, a bottle, a can: none of these qualify regardless of the ABV or product type.
Which products qualify
Draught relief at the 3.5% to below 8.5% ABV band covers:
- Beer (cask ale, keg lager, keg ale, craft keg) in containers of at least 20 litres
- Spirits-based draught products in containers of at least 20 litres, where the ABV falls in the qualifying band
- Wine and other fermented products in containers of at least 20 litres, in the same ABV band
- Still cider and sparkling cider at 3.5% to 5.5% ABV in containers of at least 20 litres (note the narrower ABV band for cider; see the rate table below)
Products that sit outside these categories (bottled wine, packaged spirits, canned beer, bag-in-box at under 20 litres, and any product above 8.5% ABV) are charged at the applicable packaged rate.
The current rates: draught versus packaged
The table below shows the rates from GOV.UK Alcohol duty rates, verified 2026-07-12. Rates are expressed per litre of pure alcohol (LPA). Always check the HMRC page before building a cost model, as rates are subject to change at each Budget.
| Product | ABV band | Container | Duty rate (per LPA) |
|---|---|---|---|
| Beer, spirits, wine and other fermented products (draught) | 3.5% to below 8.5% | 20 litres or more | £19.45 |
| Still cider / sparkling cider (draught) | 3.5% to 5.5% | 20 litres or more | £8.95 |
| Beer (packaged) | 3.5% to 8.4% | Any (under 20 litres) | £22.58 |
| Any product | Below 1.2% | Any | Zero |
For beer in the core lager and ale band, the draught rate of £19.45 compares with the packaged rate of £22.58, a saving of £3.13 per litre of pure alcohol. On a 9-gallon cask (approximately 72 pints at 4% ABV), that difference compounds into a meaningful cost reduction across a busy week.
The rates above are from the verified house-position figures. They do not cover every ABV band or product category that HMRC publishes; for spirits above 8.5% ABV or products the table does not address, check the HMRC alcohol duty rates page directly.
Why it matters for GP%: a worked pricing example
The principle is straightforward: duty is a direct cost. Using the wrong (packaged) rate on a cask product overstates your cost per pint and understates your margin.
The example below uses a 9-gallon cask of session ale at 4.0% ABV. Volumes are converted to litres; duty is calculated on litres of pure alcohol (volume x ABV expressed as a decimal).
| Using draught rate (correct) | Using packaged rate (error) | |
|---|---|---|
| Cask volume | 9 gallons = 40.91 litres | |
| ABV | 4.0% | |
| Litres of pure alcohol | 40.91 x 0.04 = 1.636 LPA | |
| Duty rate per LPA | £19.45 | £22.58 |
| Total duty on cask | £31.82 | £36.95 |
| Difference | £5.13 per cask | |
At a trade price of, say, £90 per cask (illustrative; your actual invoice price applies), the duty component is £31.82 at the correct draught rate, not £36.95. If you are running 10 casks per week, the modelling error is over £50 per week in understated margin, or more than £2,500 per year across a single cask line.
The worked figures above assume the cask qualifies (container of at least 20 litres, 3.5% to below 8.5% ABV). Verify your actual invoice ABV and volume. The retail price per pint is not stated here because it flows from your own pricing model and local market; the example shows only the duty cost impact, not the retail price to set.
For the full picture on how GP% works for licensed premises, including payroll, VAT and rent allocations, see the pubs and bars hub.
What does not qualify
The following are not eligible for draught relief, regardless of the product:
- Cans and bottles. Any product in a container under 20 litres is charged at the packaged rate.
- Mini-kegs under 20 litres. A 5-litre party keg does not meet the container threshold.
- Products above 8.5% ABV. Higher-strength beers, wines and spirits are in different duty bands not covered by the draught relief structure described here. Check the HMRC rates page for the applicable rate.
- Packaged cider above 5.5% ABV. The HP 16 confirmed still-cider draught rate applies to 3.5% to 5.5% ABV; products outside this band sit in a different category.
Products below 1.2% ABV attract zero duty whether draught or packaged. This covers most alcohol-free and very low-strength lines, which is useful when stocking a zero-alcohol tap.
Duty is not VAT: keep the two separate
Draught relief is an alcohol duty relief. It has no effect on VAT. All supplies of alcoholic drinks are standard-rated for VAT at 20%, regardless of the container size, ABV or whether the product is draught or packaged.
Duty and VAT are two separate tax obligations, calculated differently and reported to HMRC through different processes. Duty is payable by the producer or registered duty-suspense operator before the product leaves bond; by the time you buy stock from an approved wholesaler, duty is already included in the price you pay. VAT is your obligation at the point of sale to the end customer.
If you are on the VAT Flat Rate Scheme, note that the pub sector rate is 6.5%, but this is the FRS percentage applied to your VAT-inclusive turnover, not a change to the VAT rate on individual drinks. For more on VAT for licensed premises, see the hospitality VAT service page.
On the duty side, buying stock from an approved wholesaler also carries AWRS (Alcohol Wholesaler Registration Scheme) due-diligence obligations. Before purchasing, check that your supplier holds a valid HMRC approval and keep records of the check. See the AWRS checks guide for more detail.
Getting your licensed-trade numbers right
Applying the correct duty rate in your pricing model is one piece of getting your numbers right as a licensed operator. The others include VAT treatment across your product mix, tronc and payroll compliance if you run service charges, and understanding your current-year business rates position now that Retail, Hospitality and Leisure relief has ended for new claims from 1 April 2026.
A common pattern is to use a general-purpose spreadsheet that does not distinguish draught from packaged duty or does not update when rates change at Budget. Modelling with stale rates creates invisible margin errors that only surface when cash does not match the projections.
If you operate a pub, bar or licensed club and want a licensed-trade-specific review of your duty modelling, pricing and GP% reporting, the pubs and bars hub covers the full set of accounting and tax considerations for on-trade operators. For gaming machine obligations alongside your licence, see the machine games duty guide.