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
  • Take-home sugar from soft drinks fell by 43.5% between March 2014 and March 2020, according to Kantar Worldpanel data, with a significant amount of that reduction taking place before the Levy was announced in Spring 2016.

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?

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 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.

Take-home sugar from soft drinks fell by 43.5% between March 2014 and March 2020, according to Kantar Worldpanel data, with a significant amount of that reduction taking place before the Levy was announced in Spring 2016.