Below cost sales - Guidance
The prohibition on the sale of alcohol below ‘cost’ has long been a mandatory condition of all premises licences in England & Wales. It came into effect on 28th May 2014.
The Government define ‘cost’ as the amount of ‘duty plus VAT’, defined as the level of alcohol duty (‘duty’) for a product plus value added tax (‘VAT’) payable on the duty element of the product price.
The Home Office has recently issued new guidance providing a single point of reference for suppliers of alcohol and local authorities in England and Wales for banning the sale of alcohol below the cost of duty plus VAT, which you can read here.
The guidance includes an examples on how to calculate rate costs for various products, various exemptions and a note of the current duty rates (as of 1st February 2019).