Draft legislation for levy on added sugar in soft drinks - CPA

17/10/2017

Draft legislation for levy on added sugar in soft drinks (UK)

Draft regulations introducing the levy that underpins the government’s childhood obesity strategy by providing a strong financial incentive for soft drinks companies to reformulate their products with less added sugar have been published by HM Revenue & Customs.

‘Draft legislation: Soft Drinks Industry Levy’ sets out the following two sets of draft regulations needed to complete the legislative framework, commenced in the Finance Act 2017, for the levy on the production and importation of soft drinks containing added sugar; small firms will be exempt.

1) The Soft Drinks Industry Levy Regulations 2017, which will detail its scope and operation.

2) The Soft Drinks Industry Levy (Enforcement) Regulations 2017, which will provide HMRC with specific enforcement and compliance powers.

The levy comprises two rates – a lower rate on drinks with total sugar of 5 grams per 100ml – and a higher rate on drinks with total sugar over 8 grams per 100ml. Pure fruit juices and high milk content drinks won’t be taxed.

HMRC reports that a number of major British companies have already strengthened their commitment to reformulate before the levy comes into force in April 2018 – some to the extent that the sugar in all their drinks will be under the 5gm per 100ml threshold so they will pay no levy at all.

Money raised by the levy will be invested in England in programmes to encourage school- aged children to engage in physical activity and eat balanced diets. It will be apportioned by the Barnett Formula to Scotland, Wales and N Ireland.