Position Statements

UK Soft Drinks Tax

  • As an industry we recognise we have a role to play in tackling obesity. Soft drink companies have been engaged in a range of calorie reduction initiatives for many years.
  • We have led the way in sugar reduction, down almost 19% (from soft drinks) since 2013, and are the only category likely to achieve PHE’s calorie reduction target of 20% by 2020.
  • We urge Government to act to ensure tax compliant manufacturers are not disadvantaged by the risk of illicit trade created by the soft drinks industry levy.

What contribution does the soft drinks industry make to the UK economy?

The soft drinks industry encompasses manufacturers and distributers, as well as those who sell soft drinks to the public in pubs, restaurants, supermarkets and shops. Across these functions the industry directly supports a £11 billion contribution to UK GDP. It also supports an estimated 340,000 jobs.

What is the soft Drinks Industry Levy?

The new tax is due to be introduced on 6 April 2018, and will be applied to soft drinks which contain added sugar and have a total sugar content above certain thresholds.

In the Budget 2016, the then Chancellor George Osborne proposed the introduction of a tax on sugar sweetened soft drinks in an effort to tackle obesity by reducing the consumption of drinks with added sugar, and to encourage manufacturers to reduce the sugar content of their products.

Who is actually charged?

The person who packages the drinks will have to pay the levy.

The charge will come into effect on the 6 April 2018 - for any stock produced or imported from 6 April.

Who is liable?

A drink is liable for the levy if it meets all the following conditions:

  • it has a content of 1.2% alcohol by volume or less
  • it’s either ready to drink, or to be drunk it must be diluted with water, mixed with crushed ice or processed to make crushed ice, mixed with carbon dioxide or a combination of these
  • it’s packaged ready for sale
  • it has had sugar added during production, including pure cane sugars like sucrose and glucose as well as substances (other than fruit juice, vegetable juice and milk) that contain sugar, such as honey and agave syrup
  • it contains at least 5 grams (g) of added sugar per 100 millilitres (ml) in its ready to drink or diluted form

How much are companies going to pay?

The rates are: 18p per litre if the drink has 5g of sugar or more per 100ml and 24p per litre if the drink has 8g of sugar or more per 100ml.

Who collects the Levy?

HMRC.

How much revenue will be generated from the levy?

When the tax was first announced in 2016 it was expected to raise £500m, since then the forecast has reduced to £385m in the Spring 2017 budget, £275m in the Autumn 2017 budget and now £240m in the Spring 2018 statement.

What will the money be spent on?

In England, the new levy revenue will be invested in giving school-aged children a “brighter and healthier future”, including programmes to encourage physical activity and balanced diets. For Scotland, Wales and Northern Ireland, the Barnett formula will be applied to spending on these new initiatives in the normal way.

What are the risks of product entering from outside the UK without the levy being paid?

As with alcohol and tobacco, imports of these type of products will always present risk of duty evasion. Currently there is a lack of clear policy on compliance and how levy collection on importers will be enforced.

The BSDA predicts that the SDIL will result in an increase in illicit trade, from a current approximation of 5 per cent to 20 per cent. Our members have taken all possible steps to ensure compliance and any evasion of the levy by importers creates an uneven playing field for UK manufacturers.

Our advice is that any business should be reported to the HMRC fraud hotline immediately if they are suspected of importing soft drinks without paying the full Levy.

Was the soft drinks industry in favour/against the levy?

Obesity is a complex issue with many causes and there is no evidence that a tax of this sort will reduce levels of obesity.

However, industry does recognise it has a role to play in tackling obesity which is why it has been engaged in various other calorie reduction initiatives for some years now.

As well as reformulating products, industry has increased the range of portion sizes available to include smaller pack sizes; switched marketing spend to lower and no sugar products; and provide clear ‘front of pack’ nutrition labelling.

Industry efforts have helped drive an 18.7% reduction in sugar intake from soft drinks, since 2013.

How do you think the levy will impact consumption in the short and long term?

The consumer health trend has been clear for some time now. In fact manufacturers have been responding to this years in advance of the sugar tax. Consumption trends:

  • No & low calorie beverages make up the largest category in the UK soft drinks sector (58%).
  • Sales of bottled water continue to rise [9.6% in 2016].
  • According to DEFRA’s Family Food Survey, sugar sweetened soft drinks sales fell by 15.7% between 2012 and 2015, whereas low calorie soft drinks sales increased by 4.9% during this same time period.

How do reformulation rates in soft drinks compare with other categories?

  • The soft drinks industry has led the way in calorie reduction initiatives in the food and drink sector.
  • In 2015 we became the only category to set a calorie reduction target of 20% by 2020 – which we are firmly on track to achieving.
  • As a result of our efforts, sugar and calorie intake from soft drinks is down by 18.7% and 16.8% respectively since 2013.
  • Soft drink categories have contributed to reducing sugar intake, most notably carbonates (a reduction of 19%), dilutables (a reduction of 23.6%), and still and juice drinks (a reduction of 26%) since 2013.
  • We hope our actions on sugar reduction, portion size and promotion of low and no calorie products set an example for the wider food sector.
Contribution to take home sugar since 2013 (Kantar)
Soft Drinks -18.7%
Cakes + Pastries -1.9%
Frozen Confectionery +8.7%
Take Home Confectionery +2.3%
Biscuits +1.4%

A number of companies have reformulated using sweeteners. Is this safe?

Sweeteners have been approved by leading health authorities around the world, and Cancer Research UK and Diabetes UK. All sweeteners used in foods in the EU have to undergo rigorous safety testing before being approved by the European Commission. Click here for more information. 

Are manufacturers deterred from changing recipe’s to avoid consumer backlash?

Industry has not shied away from the risk of negative taste perceptions. Our members have been clear and upfront about any reductions in sugar to their products.

In addition to this, we know that many soft drink companies have switched (or increased) advertising spend to low & no calorie products within their range. Communication is what will fundamentally help consumers to make a more informed decision.