HMRC says 326 soft drinks hit by sugar tax

HMRC has confirmed that 326 soft drinks manufacturers have been hit by the sugar tax according to data held by national accountancy group UHY Hacker Young, while alcoholic spirits remain safe from such legislations.

The Soft Drinks Industry Levy was introduced on April 6, and taxes manufacturers 18p per litre produced if the drink contains five grams of sugar per 100ml, and 24p per litre for more than eight grams of sugar.

However within the 2018 market report released by William Grant & Sons, it says there are curently no plans in place to implement these legislations on spirits.

James Simmonds, partner at UHY Hacker Young and head of the firm’s drinks industry team, said: “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."

The sugar tax 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 £240m, as many soft drinks manufacturers have reformulated their products.

AG Barr recently reformulated Irn-Bru to reduce sugar content from 10.3g/100ml to 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.

Simmonds added: “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.”