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The Soft Drinks Industry Levy, or the Sugar Tax as it is commonly known, was introduced on 6 April 2018 by Finance Act 2017 to encourage manufacturers to reduce the sugar content of their drinks.
04 December 2019
The Soft Drinks Industry Levy, or the Sugar Tax as it is commonly known, was introduced on 6 April 2018 by Finance Act 2017 to encourage manufacturers to reduce the sugar content of their drinks.
The levy applies to all soft drinks consumed in the UK that contain added sugar, and at least 5 grams of sugar in total (whether added or naturally occurring) per 100ml of chargeable drink.
Sugar Tax does not currently apply to natural fruit juice, vegetable juice, milk and certain alcoholic drinks, although both Labour and the Liberal Democrats have said they would extend the tax to include juice and milk-based drinks.
This is an evolving area of the law, and detailed regulations on registration and other issues are contained in:
• Soft Drinks Industry Regulations 2018
• Soft Drinks Industry Levy (Enforcement) Regulations 2018
There are two rates of tax:
Companies that manufacture, package or import chargeable drinks have to register with HM Revenue & Customs (HMRC) and are required to keep comprehensive records of products covered by the tax.
The registration process requires certain information to be compiled in advance, such as estimates as to how much chargeable drink is likely to be packaged, produced or imported over the next twelve months.
You will also need to consider whether any premises should be nominated as a registered warehouse and the name of the person by whom it is operated.
For more information, see HMRC guidance note 1
As mentioned above, detailed records need to be kept, so that returns can be made once registration has taken place.
Returns, including nil returns, have to be filed quarterly for periods ending June, September, December and March. Each return must be submitted, together with payment of any levy, within 30 days of the end of the reporting period.
Failure to file a return on time can result in HMRC estimating a charge
Each return requires the number of litres of chargeable drink to be declared along with any litres exported, expected to be exported, lost or destroyed.
For more information, see HMRC guidance note 2
HMRC has published a number of guides on how to comply with the sugar tax, which can be accessed via their website.
If you would like to discuss how the levy may impact on your business, please contact our food and drink team.
