Soft drinks industry levy is in force

Print publication


As reported last year, Government has introduced legislation enabling the introduction of the Soft Drinks Industry Levy (SDIL) in an attempt to reduce the consumption of sugary drinks. This so called sugar tax came into force earlier this month.

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

  • it has had sugar added during production or anything (other than fruit juice, vegetable juice or milk) that contains sugar such as honey
  • it contains at least 5 grams of sugar per 100 millilitres in its ready to drink form
  • it’s either ready to drink or, to be drunk, needs to be diluted with water or crushed ice or mixed with carbon dioxide
  • it’s bottled, canned or otherwise packaged
  • it has a content of 1.2% alcohol by volume (ABV) or less.

If a drink meets the above criteria SDIL will be charged at one of two rates depending on the level of sugar. The standard rate is £0.18 per litre of prepared drink with a higher rate of £0.24 per litre being applied to soft drinks that have a higher sugar threshold.

As a drinks business (unless you can rely on the small producer exemption) you must register with HMRC for SDIL if:

  • you own a brand of a liable drink or produce liable drinks under another brand
  • you bottle, can or otherwise package liable drinks for someone else
  • you import liable drinks.

SDIL will be charged by reference to fixed quarterly accounting periods ending on 31 March, 30 June, 30 September and 31 December and the legislation provides for two specific criminal offences for non-payment. Fraudulent evasion of SDIL carries a maximum potential sentence of seven years’ imprisonment while the second offence of failure to notify HMRC of the liability to register for the levy carries a maximum potential sentence of three years’ imprisonment.

WM Comment

If you wish to discuss how the new Soft Drinks Industry Levy affects you please contact our Tax team who will be able to guide you through the new legislation.