Cider industry at war over tax-exemption deal

The EU has demanded an end to a duty exemption worth £2,500 to small-scale producers

Small-scale cider producers fear a new directive will hit their profits (Getty)

Britain’s cider-makers raised a pint to George Osborne’s decision to cut duty by 2p in the Budget – but a civil war has broken out in the industry over a tax-exemption deal.

A demand from Brussels that the UK Government abolish a duty exemption worth £2,500 to small-scale cider and perry producers has been met with cries of anguish from some makers and trebles all round from others. Reports that getting rid of the exemption would threaten the existence of 80 per cent of craft cider-makers were dismissed last night.

There are about 480 UK cider-makers and the current exemption dates back to 1976. It means those who produce less than 7,000 litres a year – about 12,000 pints – do not have to pay the duty. The Government has until April to comply with the European Commission demand.

One cider-maker, who is above the duty threshold, said the EU proposal would end what has been called a tax on aspiration.

The producer said: “[The duty] makes it very difficult if I’m trying to sell my cider in or around Bristol, where a lot of the smaller producers are… because my costs are 25 per cent more than the smaller businesses.

“This figure that 80 per cent of cider-makers will be affected is nonsense. It’s much closer to 50. When you get close to the threshold you have to make a huge jump over it if you want to increase the size of your business and not lose money as a result.”

At a meeting of the National Association of Cider Makers (NACM) last week the EU’s proposal was the number one topic of discussion. One attendee said: “It pretty much amounted to ‘There’s not a lot we can do’, given it is the EU’s decision and we all have to comply.”

The NACM estimates that “probably a few hundred” small producers will be affected. A spokesman said that many would go out of business because of the ruling, which he described as “very disappointing”.