Publications that covered this story include The Caterer, The Morning Advertiser and Food & Drink International on 16 July 2018.
- But income from Soft Drinks Industry Levy projected to halve as manufacturers cut sugar levels
- Taxes like ‘Sugar Tax’ add to complexity and red tape of tax system
HMRC confirm that 326 soft drinks manufacturers have been hit by the so-called ‘Sugar Tax’.
The Soft Drinks Industry Levy was introduced on April 6, and taxes manufacturers 18p per litre produced if the drink contains 5 grams of sugar per 100ml, and 24p per litre for more than 8 grams of sugar.
The measure was expected to raise £520m per year, to be used to pay for school sports. However, the Government has recently revised down its expected income form the Levy to just £240m, as many soft drinks manufacturers have reformulated their products.
For example, AG Barr recently reformulated Irn-Bru to reduce sugar content from 10.3g/100ml to just 4.7g/100ml. AG Barr says that 99% of its products are now not subject to the ‘Sugar Tax’.
The Government says, however, that it will take money from other Government budgets to ensure the full £520m is made available for school sports.
While the reaction of soft drinks manufacturers to the Levy 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, partner in our Nottingham office and head of the firm’s drinks industry team, comments: “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 shortfall in money for school sports, however.”