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Rishi Sunak told MPs in his Budget speech that the planned increase in duty on spirits such as Scotch whisky, wine, cider and beer will be cancelled from midnight.
He said this alone will represent a tax cut worth £3 billion.
Mr Sunak criticised the current system of alcohol taxes as outdated and too complicated, as he revealed a raft of changes.
“we are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years,” he said.
“We’re taking five steps today to create a system that is simpler, fairer, and healthier.”
The Treasury said it will slash the number of main duty rates from 15 to six as part of the sweeping changes.
The Chancellor said changes to duties will see taxes increase on some higher strength drinks, such as some red wine and “white ciders”.
However, consumers of some lower strength products, such as rose, fruit ciders, liqueurs, and lower strength beers and wines, “will pay less”, he said.
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