Guides › Small Producer Relief for a new business
Small Producer Relief for a new business: estimating your first year
Checked against GOV.UK on 1 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
- Small Producer Relief needs an annual production figure to work out your discount. Normally that's last year's total, but a new business hasn't got one.
- If you're new, HMRC says to use an estimate of what you'll make in the current production year.
- If you made products for only part of last year, you scale what you made up to a 12-month figure.
- HMRC doesn't say what happens if your estimate turns out too low (and you're still under the limit), so keep a running total and ask HMRC if you're unsure.
The production year
For Small Producer Relief, HMRC says "the production year … is 1 February up to and including 31 January." All the figures below are for that year, not the calendar year or your financial year.
Which figure do I use?
| Your situation | The figure to use |
|---|---|
| You made products for the whole of last production year | Last production year's actual total pure alcohol, in hectolitres, across all your products and premises. |
| You made products for only part of last year | Scale it up to 12 months with HMRC's steps, below. |
| You're a new business and made nothing last year | An estimate of what you'll make in the current production year. |
Source: How to work out your Alcohol Duty rates if you're eligible for Small Producer Relief.
Estimating as a new business
To qualify at all you must "reasonably expect that the products you make in the current production year will contain 4,500 hectolitres or less of pure alcohol". For the figure itself, HMRC's technical guide says you must "take all of the relevant factors into account, including any contracts you already have to supply small producer alcoholic products and any expansion plans."
A practical way to build your estimate, which is our suggestion and not HMRC's rule:
- Work out how much you can realistically press and ferment this production year (your apple supply and your tank capacity are the limits).
- Convert each product to pure alcohol: litres × ABV ÷ 100, then divide by 100 for hectolitres.
- Add a sensible margin for extra batches or new products. An estimate that's too low is the risk.
- Write down how you worked it out and keep it with your records.
If you started part-way through last year
HMRC's heading is "If your premises were used for making alcoholic products for only part of the previous year". Its steps are:
- Divide the amount of pure alcohol produced by the number of days on which production started.
- Multiply that amount by 365 (the number of days in the production year).
A warning about step 1. The wording reads as if a word is missing. Our reading, and the one Duty Sorted uses, is the number of days from the day you started production to 31 January, counting both days. Using the days you actually produced on would give a much bigger figure. If you're unsure, ask HMRC which they mean.
Worked example
You started making cider on 1 September and produced 2.5 hectolitres of pure alcohol by 31 January.
- From 1 September to 31 January, counting both days, is 153 days.
- 2.5 ÷ 153 × 365 = 5.96 hectolitres (shown to 2 decimal places).
Using that as your annual figure, with the rates in force from 1 February 2026, 1000 litres of 6.0% still cider would have tax type code 367, a Small Producer Relief discount of £9.15 per litre of pure alcohol off the full rate of £10.39, a rate of £1.24, and duty of £74.40.
The rate is worked out by the same calculation Duty Sorted uses, so it updates when the rates change each February.
What HMRC says, and what it doesn't
- If you go over 4,500 hectolitres: "You are no longer eligible for the relief and the full rate of duty will apply to the products you make both: 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. For a small cider maker this is a long way off, but it is the rule.
- If your estimate turns out too low but you stay under 4,500 hectolitres: HMRC's guidance doesn't say whether your earlier discounts change. Don't assume either way. Keep a running total, compare it with your estimate, and ask HMRC if you're well over.
- The 4,500 hectolitre test is about what you reasonably expect. Keep notes on how you reached your estimate, so you can show it was a fair one.
A first-year checklist
- Have your approval (APPA) in place before you produce. See how to apply and what changed for small cider makers.
- Make your estimate and write down how you got it.
- Record every batch as you go: product, ABV, litres, date made.
- Check your running total against your estimate every month.
- Check each product's category. Fruit cider and mead are charged at a much higher rate.
- If you sell on keg or bag-in-box, check Draught Relief, and see what duty is per bottle and pint when you price your range.
- Know when duty is due: it goes on the return for the month the cider leaves your premises.
- If you own or are connected to another producer, their production counts towards your figure.
- When your first production year ends on 31 January, your actual total becomes next year's figure (scaled up to 12 months, as above, if you only made products for part of it).
Let Duty Sorted keep the running total
In Duty Sorted you enter your annual figure and say where it came from: last year's total, an annualised part year, or a new-business estimate. It adds up every batch, shows where you stand against the figure, and warns you if your logged production doesn't match. £15 a month after a 14-day free trial, no card needed to start.
This guide is general information, not tax advice, and the rules and rates can change. Where HMRC's guidance is unclear or silent, we've said so and given our reading, which isn't HMRC's. Check the GOV.UK pages linked above and ask HMRC or your adviser before relying on an estimate. Duty Sorted is independent and is not made or approved by HMRC.