UK distilleries hope for tax break for production of hand sanitiser

The British Distillers Alliance (BDA) has written to HMRC requesting duty relief for the increasing number of distilleries using their alcohol to create hand sanitiser, which they are then distributing free of charge to help in the fight to protect people from coronavirus. 

Distilleries across the UK have been extending production to include emergency supplies of hand sanitiser, but the high strength alcohol used is still subject to high levels of tax for the producer. 

Alan Powell, from Excise duty consultancy, Alan Powell Associates, said he has written to HMRC on behalf of the BDA about the emergency use of alcohol for the ad hoc production and distribution of hand sanitiser.

He said: “This will be of small quantities but the excise duty is massive (over £28 per litre of pure alcohol).”

His letter stated: “The question has arisen from several BDA members about the duty status of ethanol held in duty suspension and “converted” to hand sanitiser for external use.”

He then goes on to ask HMRC if the duty charge for the alcohol used in these cases could be waived. 

A number of distilleries have moved into this sector already. 

Silent Pool Gin Distillery introduced its Silent Pool “Silent Treatment Hand-Sanitiser” on March 17, and it said it will be offering 50 free bottles a day of the 70% abc product via its distillery shop. Online orders will receive a bottle too. 

Psychopomp, the independent micro distillery in Bristol, has also created its own hand sanitiser, which it is offering to customers via its shop. It said it is currently limiting this to 10cl per person, in order to help as many people as possible, and it is now asking people to bring their own containers. 

Leith Gin in Scotland has suspended production to make sanitiser and it has launched an appeal for bottles to put the product in. 

Owners, Karin and Derek Mair, are asking for help in sourcing bottles to put their high-strength sanitiser in. The duo currently have 1,000 litres of product (made using WHO guidelines and including glycerin and demineralised water), ready for bottling.

The couple said the sanitiser is free but it is hoping for a tax break to help with the duties they are accruing - in excess of £35,000 - on the 1,000 litres they are planning to distribute. 

Brewdog is also moving into this arena with the launch of its Punk Sanitiser. The product will be given away free of charge for those who need it. 

As a result of this, the BDA said the HMRC is working on a policy to support these distillers, and a response is expected soon. 

This subject is also a point of discussion globally with a number of big global distillers working to address the shortages in supply of hand-sanitiser around the world. 

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