UK sugar tax: 326 businesses hit by soft drinks industry levy

17-Jul-2018 - Last updated on 17-Jul-2018 at 09:36 GMT

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In the UK, 326 businesses have registered for the Soft Drinks Industry Levy, according to data from HMRC and obtained by chartered accountants UHY Hacker Young.

Introduced in April, the Soft Drinks Industry Levy (SDIL) taxes manufacturers 18p per litre for drinks with 5g sugar per 100ml, and 24p per litre for drinks with more than 8g sugar.

Producers, importers and packagers of drinks that are subject to the levy are required to register for the SDIL. Small producers (those who produce less than one million litres worldwide of liable drinks a year) are exempt from the levy.

The data obtained by UHY Hacker Young from HMRC (Her Majesty's Revenue and Customs) does not quantify the total sums producers are paying under the levy or how much the levy is raising; but does indicate the number of companies that are paying a tax on sugar-sweetened drinks.

‘Reducing sugar levels in drinks makes sense financially’

In March, the UK government said income from the levy was likely to be half of what was originally predicted, at £240m (USD $318m) instead of £520m (USD $690m), saying this showed the success the levy was having in encouraging producers to reformulate or shift their emphasis to lower sugar products.

The government has pledged, however, that the full £520m for school sports will still be funded from other sources.

UHY Hacker Young says that while the reaction of soft drinks manufacturers to the SDIL has been a positive one, targeted taxes of this type run the risk of gradually adding to red tape and complexity in the tax system.

James Simmonds, head of the firm’s drinks industry team, said: “Targeted taxes like the ‘sugar tax’ might have very noble aims, but they do run counter to the aim of simplifying the tax system.

“The evidence of health benefits from these taxes is relatively limited, but the sugar tax certainly adds to the burden of cost and red tape for businesses.

“It’s good to see the soft drinks manufacturers responding so positively to the new tax – reducing sugar levels in drinks makes sense financially, given the potential cost of the levy.

“It does remain to be seen how the Government will make up the £280m ($372m) shortfall in money for school sports, however.”