Section 3 — production of alcoholic products
Find out about the requirements for producing alcoholic products and which activities are defined as production.
To produce alcoholic products in the UK, you must hold an alcoholic products producer approval (APPA) as explained in section 4 — approvals.
Alcoholic products become liable to duty when they are:
- produced (that is when its strength exceeds 1.2% alcohol by volume)
- imported into the UK, or moved from Great Britain (England, Scotland and Wales) to Northern Ireland
For further information about duty liability, read section 7 — duty liability.
When a product is produced is not defined in legislation, but as a general rule, alcoholic products are produced when they are finished and ready for consumption. This means no further processes are performed to alter the strength of the product and organoleptic properties. Solely holding alcoholic products leading to a gradual change in strength does not classify as production, for example whisky held for maturation without performing additional processes.
We also understand that for some alcoholic products some additions or processes are routinely carried out as part of the packaging process. Generally, packaging alcoholic product in duty suspense will not be classed as production even if some further additions are made by the packager, provided the strength, product type and organoleptic properties of the alcoholic product remains the same.
The annex in this section contains certain scenarios setting out when an alcoholic product is produced.
Any alcoholic product you produce that are to be used only for research or experiments into the production of alcoholic products are relieved from duty.
Research and experiment
The following paragraph has force of law under Section 81 of Finance (No. 2) Act 2023.
To qualify for relief, the alcoholic product must be produced to test new production processes, equipment and ingredients. The relief can apply to trials by approved producers who want to test the suitability of new production methods or materials, and do not intend to sell the alcoholic product.
Disposal of alcoholic products produced by approved producers
The following two paragraphs have force of law under Section 81 of Finance (No. 2) Act 2023.
To qualify for relief from duty, you must not sell or give away any of the alcoholic product produced. You can conduct taste tests among your employees, but the alcoholic product must not be consumed in any other circumstances. Taste tests must not include prospective or actual customers.
When the research or experiments are finished all the remaining alcoholic product must be destroyed.
Record keeping
The following two paragraphs have force of law under Section 81 of Finance (No. 2) Act 2023.
You must keep a record showing:
- the date of production
- the quantity and alcohol by volume of alcoholic product produced
- the date and method of destruction
- the quantity destroyed
Records must be in a form acceptable to our officer and produced at any reasonable time. Records must be kept for at least 6 years, unless otherwise agreed with excise and gambling duties enquiries.
Selling the finished alcoholic product
If you subsequently decide to release any of the alcoholic product you have used for research or experiments then it will be liable for duty in the usual way as set out in section 7 — duty liability.
The following production processes are specific to beer.
3.4.1 Additions to beer
Priming
Priming is adding sugar solution to beer to encourage secondary fermentation and increase its alcoholic content.
Priming can only take place on premises included in your alcoholic products producer approval (APPA) as priming is classified as a production process. Records must be kept of the priming.
Your records must include the following:
- the date and time of the priming
- the type of beer (product name) that is primed
- the quantity and strength of beer that is primed
- the type and quantity of priming’s added
- the quantity and expected strength of the resulting product
These records should be kept on the approved premises where priming is carried out and made available to our officer when requested.
Finings
You can add finings (provided they do not contain alcohol), to beer on any premises. We do not require any record to be kept of the addition of finings to beer but, if you do keep records, we can ask to read them.
Other additions
You should not mix alcoholic products after the duty point except in certain circumstances specified in subheading 7.11 mixing of alcoholic products part of section 7 — duty liability.
3.4.2 Removing alcohol from beer
The alcohol produced from de-alcoholisation processes or extracted from yeast (other than that produced by traditional yeast pressing) is classified as spirits.
If you intend to reprocess the alcohol you’ve extracted, which is classified as spirits, before you start the process you must:
- be approved to produce spirits under your alcoholic products producer approval (APPA)
- comply with the appropriate requirements of the Alcoholic Product Regulations 2023
The extracted alcohol can be:
- destroyed
- delivered for vinegarisation
- used to produce other alcoholic drinks
Your business records must contain the details of any deliveries for venularization or any destruction.
When alcohol extracted from beer (for example, waste or surplus beer) is re-introduced to beer products (where the spirits form a replacement source of alcoholic strength), the resulting product is classified as spirits and may be liable to a higher rate of duty, unless treatment of such a mixture is as described in the 2 instances in subheading 2.1 beer contained in section 2 — alcoholic products.
If you want to produce other alcoholic drinks using the extracted alcohol, you need to seek approval so that the other alcoholic products are included in your alcoholic products producer approval (APPA).
3.4.3 Yeast slurry
Yeast slurry is a waste product generated during the brewing process. It usually contains between 4% and 8% alcohol by volume. Although yeast slurry contains ethyl alcohol, it’s classed as destroyed and duty is not charged on the ethanol contained in it, if it’s sent to be used as livestock feed. However, if ethyl alcohol is extracted from the yeast slurry, the ethanol will be liable to the spirits rate of duty.
This section has force of law under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992.
To allow relief from payment of duty on yeast slurry, you must keep a record showing these:
- the amount of yeast slurry produced
- the details of any yeast slurry removed to be used as livestock feed, including
- the name and address of where the yeast slurry is sent to
- date the yeast slurry is removed from the approved premises
- details of any yeast slurry removed to approved premises, including
- the amount of yeast slurry removed
- the name and address of the approved premises
- date the yeast slurry is removed from the approved premises
- details of any yeast slurry used for any other purpose, including
- the amount of yeast slurry removed
- the name and address of where the yeast slurry is sent to
- date the yeast slurry is removed from the approved premises
- details of the use to which the yeast slurry is put
The following production processes are specific to cider.
Re-processing products
You can re-ferment any cider or residues in your approved premises which are:
- taken from duty-unpaid stocks on your approved premises
- added to a fermenting vessel in the course of preparing for fermentation and before cider is drawn off
Enter the quantity of cider involved in your production records. Make sure your records are accurately and promptly updated with the details so that we can verify the quantities used in this manner.
You may be eligible to claim a refund of the Excise Duty on duty paid cider which has been returned to your approved premises for re-processing. For further information on spoilt alcoholic product, read section 15 — duty paid spoilt alcoholic product.
The following production processes are specific to wine and other fermented products.
Re-processing products
You can re-ferment any wine, other fermented products or residues in your approved premises which are:
- taken from duty-unpaid stocks on your approved premises
- added to a fermenting vessel in the course of preparing for fermentation and before wine or other fermented product is drawn off
Enter the quantity of wine or other fermented product involved in your production records. Make sure your records are accurately and promptly updated with the details so that we can verify the quantities used in this manner.
You may be eligible to claim a refund of the Excise Duty on duty paid wine or other fermented product which has been returned to your approved premises for re-processing.
The following production processes are specific to spirits.
3.7.1 Spirits rectifiers and compounders
Prior to 1 February 2025, if you carried out alcohol production activities on duty-suspended alcoholic products such as or compounding and rectifying spirits, you were required to hold an excise warehouse approval. There is no longer a requirement to perform these activities in an excise warehouse, although you may continue to do so.
From 1 February 2025, anyone rectifying or compounding spirits will require an alcoholic products producer approval (APPA), as per section 82 of the Finance (No.2) Act 2023. This approval allows producers to receive duty free spirits to an approved premises.
3.7.2 Duty Stamps
Producers and bottlers of spirits destined for the UK market should be aware of the requirements for the duty stamping of retail containers. Read UK Duty Stamps Scheme (Excise Notice DS5) for more information.
3.7.3 UK spirit drinks with a geographical indication
HMRC is the designated verifying authority for UK spirit drinks with a protected geographical indication. This means that relevant authorities must verify that any spirit drink with a protected geographical indication complies with specific conditions set out in the product’s relevant product specification. The cost of providing this verification must be paid by the manufacturers of the spirit drink,
If you produce a UK geographical indication spirit drink, you must apply for verification under the Spirit Drinks Verification Scheme. Contact [email protected] for enquiries about the scheme.
3.7.4 Certificates of age and origin
HMRC issues certificates of age and origin to support exporters and producers of UK manufactured spirits and facilitate entry of their product into overseas markets.
The majority of issued certificates are in respect of Scotch Whisky exports. The certificates are an essential part of the industry’s efforts to protect Scotch Whisky in overseas markets from counterfeiting. They demonstrate the authenticity of spirits drinks.
For more information, and to apply, read certificates of and age and origin for the Spirit Drinks Verification Scheme.
3.7.5 Low Wines, Feints and Fusel Oil
Disposal and destruction of feints
Normally you’ll carry feints forward from one manufacturing period to another. If you’ve feints which you no longer wish to use in the manufacture of spirits, these should be isolated and an account taken of them. They can be held on the approved premises in duty suspension or destroyed. If they pass a duty point, duty must then be paid. Your records must show what you’ve done with the feints.
Re-distillation of low wines, feints and spirits
You may re-distil low wines, feints and spirits at any time.
Record the details of operations to re-distil low wines, feints and spirits in your business records.
Removal of fusel oil
You may remove any fusel oil which has:
- separated from the feints in the feint’s receiver
- collected in oil traps
You must measure the quantity and strength of the fusel oil before you dispose of it and record the details in your records. We do not charge duty on fusel oil which is below 8.7% alcohol by volume, but you must be sure that no spirits or feints are mixed with the oil. If you find it contains more than 8.7% alcohol by volume, it must be ‘washed’ so that the alcohol content is reduced to 8.7% or below before it is removed from your approved premises.
If the strength of any fusel oil is greater than 8.7% alcohol by volume, the whole product is liable to Excise Duty at the spirits rate.
If you keep fusel oil recovered from the distillation of materials entered to inward processing in the community, it may be chargeable with Customs Duty.
If the fusel oil is to be used in place of a mineral oil to fuel any engine, motor or other machinery, it is classed as a fuel substitute and is liable to the light oil rate of duty. Since April 2022, excise duty is also chargeable at the light oil rate of duty if the fusel oil is to be used as a heating fuel. Read motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179) and SI 1995/2716 Article 4 for more information.
These examples relate to section 3.2.
Point of production examples
Below are certain scenarios setting out when an alcoholic product is produced. These include further processing by a contract packer, that would render the product unstable if added prior to transportation, which are not classified as production as the alcohol by volume and organoleptic properties of the product remain the same.
If you are unsure about whether or not the processes you are carrying out count as production and a result whether or not an alcoholic products producer approval (APPA) is needed, contact excise and gambling duties enquiries.
Scenario 1 — base cider including mixed bases
(a) Person A makes cider on their premises and sends a base cider to another person for packaging, person B. Person A is not able to blend additional items at their site as this would result in an unstable product being transported for packaging. At Person B’s site, the base cider is blended with additional permitted items and packaged. Person A has produced cider and requires an alcoholic products producer approval (APPA). As the strength and category of alcoholic product does not change by the additions during packaging, person B does not need an alcoholic products producer approval (APPA).
(b) Person A makes cider from a mix of cider bases, their own cider base and some purchased under duty suspense from Person B (another small producer) and Person C (a large cider maker). Persons A, B and C will each need their own alcoholic products producer approval (APPA) as they are all producing cider.
Scenario 2 — cider to sparkling cider
Person A sells still cider to Person B who then ‘renders’ it sparkling after secondary fermentation. Person A will need an alcoholic products producer approval (APPA) as they produce still cider. Person B will also need an alcoholic products producer approval (APPA) as they produce sparkling cider.
Scenario 3 — two separate producers, one product category to another
If Person A sells an alcoholic product to Person B, and the latter uses it to produce a different alcoholic product, person B has produced the new alcoholic product. The organoleptic properties of the product have changed. Both Person A and person B will need an alcoholic products producer approval (APPA).
Scenario 4 — contract packaging
The alcohol in products sent by a producer to a third party packager is produced by the producer, and not the packager, even if the packager ultimately releases (pays the duty on) the alcoholic products.
(a) Person A makes beer but does not have bottling facilities so sends the beer to person B to bottle. Only Person A will require an alcoholic products producer approval (APPA).
(b) Person A makes cider and blends this with fruit and(or) flavours to produce a fruit cider (other fermented product). They send the blended product to Person B who packages it. Only Person A will need an alcoholic products producer approval (APPA).
(c) Person A imports bulk wine and moves that wine in duty suspense to Person B who packages the wine into bottles. As part of the bottling process Person B carries out filtration or clarification processes which do not change the strength of the wine. Neither Person A or B will require an alcoholic products producer approval (APPA).
If there is additional processing by the person carrying out the packaging impacting the final alcoholic product, it could be classified that the packager has produced an alcoholic product.
(d) Person A makes cider and sends this to Person B. Person B uses some of their own ingredients to blend with the base to produce a fruit cider (other fermented product). Person B has produced an alcoholic product as the blending has resulted in a different alcoholic product, even if it returned to Person A and is sold and marketed by Person A. Person A and Person B will each need an alcoholic products producer approval (APPA).