Guides › Connected businesses
Connected businesses and Small Producer Relief: does your group's production count?
Checked against GOV.UK on 2 October 2026. Written by Bradley Cadd, who runs Duty Sorted, an independent business that isn't part of HMRC. About Duty Sorted. Not tax advice: see the note at the end.
The short version
- Your Small Producer Relief (SPR) figure counts everything you make: every product, at every premises of yours. Cider, beer and spirits are added together, in hectolitres of pure alcohol.
- If another producer is connected to you, their production is added to yours. The combined figure must be 4,500 hectolitres or less for any of you to qualify.
- "Connected" is wide: family, business partners, and companies under the same control.
- HMRC's guide defines your production figure as the total for "a production premises or group of connected premises", and says you use that figure to work out your rate as well as your eligibility. On that reading, a connected business could move you into a smaller discount band even when you're well under the limit yourself.
- Work you do for other producers, or under licence, counts towards your figure too.
Your figure counts everything you make
Before groups come into it, SPR looks at your total production across all your products. GOV.UK says you must include "the total amount of pure alcohol contained in all the alcoholic products you make at all your premises". A cider maker who also makes a little beer or spirit adds them all together. Each product doesn't get its own allowance.
You work out each product's pure alcohol by multiplying its volume by its ABV, then add them up for the production year (1 February to 31 January). See how to work out SPR for the steps, and SPR for a new business if you haven't made a full year yet. Keep your running total with batch records.
Sources: Check if you're eligible for Small Producer Relief.
Who counts as "connected"?
HMRC says you have group premises if, as well as your own premises, "another producer connected to you makes products on their premises". Whether two people or businesses are connected is decided under section 1122 of the Corporation Tax Act 2010. HMRC's technical guide says the definition is "very wide", and gives these examples:
- Family. Individuals connected by marriage, family relationships "and the like".
- Business partners. A partner is connected with their business partners and their spouses.
- Companies under the same control. They're connected with each other, and with the people who control them.
- A company and a controlling shareholder, whether the shareholder is a person or another company.
- Connected people controlling companies. For example, a husband controlling company A and his wife controlling company B.
In exceptional circumstances HMRC may treat two connected people as not connected. Its example is two family members who are estranged and have no relationship with each other. If you aren't sure whether someone is connected to you, HMRC says to contact it. A cider maker who owns a brewery company, or whose spouse owns a distillery, should find out before assuming the figures are separate. You also tell HMRC about connected people when you apply for approval, and about new ones afterwards: see how to apply for an APPA.
Sources: How your business set up can affect your eligibility and technical guide, section 12 (12.5, 12.9, 12.10).
How a group's figure is added up
For each set of premises in the group, work out its actual or "deemed" production figure, then add them all together. HMRC's example is a group of six: four that made alcohol all of last year, one that started part-way through, and one that will only start this year. The same rules apply to each, then you add the figures up. For a premises that only made alcohol for part of the year, you scale its figure up to a full year (see the new business guide).
The group total has to be 4,500 hectolitres of pure alcohol or less, both for the last production year and for what you reasonably expect this year. Go over, and you lose SPR on products made from that point in the current year and the following year (see below).
Why it matters even if you're small
Take a cider maker whose own production is 40 hectolitres of pure alcohol. Their company also controls a brewery company that makes 300 hectolitres. The two are connected, so the group's figure is 340 hectolitres. Both are under 4,500, so both qualify, but the figure sets the size of the discount. The same 1000 litres of 6.0% still cider, using the rates in force from 1 February 2026:
| Cider company alone (40 hl) | Group figure (340 hl) | |
|---|---|---|
| Full rate per litre of pure alcohol | £10.39 | £10.39 |
| SPR discount | −£3.61 | −£0.90 |
| Your rate | £6.78 | £9.49 |
| Duty on this batch | £406.80 | £569.40 |
This follows HMRC's definition of the production figure as the total for a premises "or group of connected premises", used to work out the reduced rate. HMRC's business set-up page spells out the 4,500 test for groups, but not in so many words how each member's band is set. See "What GOV.UK doesn't spell out" below. Worked out with the same calculation Duty Sorted uses, so it updates when the rates change each February.
Work for other producers, and under licence
Whose production counts depends on who makes the product. These are the situations GOV.UK covers:
| Situation | What GOV.UK says |
|---|---|
| You make a product under contract for another producer (you're paid a service charge, they don't market it) | It counts in your production figure. The products get your reduced rate, as the maker. |
| You make a product under licence (you pay the brand owner royalties, or the brand and rights belong to someone else) | It counts in your production figure, but gets no relief. If half or more of your alcohol in a production year is made under licence, you don't qualify for SPR at all. |
| You send cider to another producer to be packaged | You include it in your figure, and the packager doesn't, as long as they don't significantly change its strength or type. The rate is yours. |
| You sell your product to another producer who uses it to make a different product (cider to a cider-brandy maker, say) | You both count the pure alcohol in your own final products. |
| You hold someone else's product in duty suspension on your site | You don't include it in your figure. The producer does. (More on duty suspension: when is duty due.) |
| You share premises with another producer | The figure is the total production within the premises, so you each apply the same rate. |
| The premises changes hands mid-year | The figure is the combined total of both owners' production. If there was a gap in production, the figures are scaled up to a full year. |
Sources: eligibility guidance and technical guide, section 12 (12.5 to 12.8).
If you merge with another business
After a merger you may get transitional relief for 3 years: the production year the businesses came together, plus two full production years. Instead of the merged business's real production, you use an adjusted production amount that moves gradually towards the real one.
- Year 1: the production figure from the largest producer's premises in the year before the merger.
- Year 2: take the merged business's actual production in year 1, subtract the year 1 adjusted amount, multiply by one-third, and add the year 1 adjusted amount.
- Year 3: take actual production in year 2, subtract the year 1 adjusted amount, multiply by two-thirds, and add the year 1 adjusted amount.
- After that: you use your actual production.
GOV.UK's example: business A makes 1,000 hl and business B makes 500 hl in the year before they merge. The merged business C makes 1,700 hl in year 1 and 1,900 hl in year 2. Its adjusted amounts are:
| Transition year | Adjusted production (hl of pure alcohol) | Working |
|---|---|---|
| 1 | 1,000 | The larger business's figure (A) |
| 2 | 1,233 | 1,000 + (1,700 − 1,000) × ⅓ |
| 3 | 1,600 | 1,000 + (1,900 − 1,000) × ⅔ |
GOV.UK rounds these to whole hectolitres in its example.
You can't get transitional relief if you join with a business that isn't eligible for SPR on its own. In all three years the adjusted amount must be 4,500 hl or less, and for each set of premises in the merged group less than half of the previous year's alcohol must be made under licence. It ends early if the real production across all the premises is lower than the adjusted amount, or if you merge with another small producer (you may then start a new transition period).
If you separate from another business
If a connection ends, your production for the year before the separation counts as nil. You must estimate your production for the current year, and that estimate is your annual production figure. Don't re-merge with the same businesses within 7 years if you want transitional relief later: you won't be eligible if you do.
Source: How your business set up can affect your eligibility.
If the group goes over 4,500 hectolitres
GOV.UK says you're "no longer eligible for the relief" and the full rate applies to products you make from that point onwards in the current year and in the following production year. HMRC may also assess you for the difference between the reduced rate you paid and the full rate. Your estimate matters too: HMRC's technical guide says that knowingly understating it can lead it to recover all the duty that went unpaid. See how to make an estimate.
What GOV.UK doesn't spell out
- How a group's total sets each member's band. The technical guide defines the figure as the total for "a production premises or group of connected premises" and says you use it to calculate your reduced rate. The business set-up page only spells out the 4,500 test for groups. We've read it the way the technical guide reads, but if the amount of discount matters to you, check with HMRC.
- The edges of "control". The examples are examples. If your situation isn't one of them, HMRC says to ask.
- Connections that form part-way through a year, other than through a merger.
- Northern Ireland has extra production limits for each type of product, on top of the 4,500 hl limit. This guide doesn't cover them.
What Duty Sorted does with this
Duty Sorted doesn't know about your other businesses. It uses the production figure you enter for the SPR year, so if you're in a group, work out the figure and enter it. Its warnings about bands and the 4,500 hl limit are based on the batches you log, so they won't count a connected business's production for you. For a group or a recent merger, treat them as a check on your own site, not on the group.
Keep your own production straight
Duty Sorted logs each batch, keeps your production-year total and shows where you are in the SPR bands. Try your own numbers in the free calculator first. £15 a month after a 14-day free trial, no card needed to start.
This guide is general information, not tax advice, and rules and rates can change. Whether businesses are connected can depend on details this guide doesn't cover, so check the GOV.UK pages linked above and ask HMRC or your adviser if you're unsure. Duty Sorted is independent and is not made or approved by HMRC.