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Position Statements

Soft Drinks Industry Levy

  • 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
  • Sugar intake from soft drinks fell by 31.3% between September 2015 and September 2019 and we are the only category likely to achieve Public Health England's calorie reduction target of 20% by 2020

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 was introduced in April 2018, and was applied to soft drinks which contain added sugar and have a total sugar content above certain thresholds.

In the 2016 Budget, 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 pays the levy.

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 is 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 is 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 do companies 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?


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 reduced to £385m in the Spring 2017 budget, £275m in the Autumn 2017 budget and £240m in the Spring 2018 statement.

What is the money being 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.

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 a 26.8% reduction in sugar intake from soft drinks since 2014.

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- and low-calorie beverages make up the largest category in the UK soft drinks sector (64% in 2017)
  • Sales of bottled water continue to rise [4.5% in 2017]
  • According to Defra’s Family Food Survey, sugar-sweetened soft drinks sales fell by 15.7% between 2012 and 2015.

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, and this has already been achieved
  • As a result of our efforts, sugar intake from soft drinks is down by 26.8% since 2014
  • 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.

Have manufacturers been deterred from changing recipes to avoid consumer backlash?

Industry has not shied away from the risk of negative taste perceptions. Our members have been clear and up-front 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 no- and low-calorie products within their range. Communication is what will fundamentally help consumers to make a more informed decision.