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Focus on Regulation

UK ‘Sugar Tax’ Comes into Force – New Guidance Published for Industry

The UK tax authority HM Revenue and Customs (HMRC) has published a series of practical guidance documents and additional online information to assist companies with understanding and complying with the new UK ‘Soft Drinks Industry Levy’, which takes effect from 6 April 2018.

The new levy applies to all soft drinks (other than natural fruit juice, vegetable juice, milk and certain alcoholic drinks) packaged in or imported to the UK, that contain added sugar and at least 5 grams of sugar in total (both naturally occurring and added sugar) per 100ml of prepared drink (“chargeable drinks”). There are two rates – £0.18 per litre for drinks containing 5g or more total sugars per 100ml, rising to £0.24 per litre for drinks containing 8g or more total sugars per 100ml.

Companies that produce, package or receive imported chargeable drinks will need to register with HMRC and keep detailed records of products that are subject to the levy. The online registration system is now up and running.

The legal framework for the levy is set out in Part 2 of the Finance Act 2017. Additional provisions relating to dilution rations, exempt drinks, registration requirements, tax credits and record keeping are set out in the Soft Drinks Industry Levy Regulations 2018 and the Soft Drinks Industry Levy (Enforcement) Regulations 2018 which come into force today, 6 April.

The new guidance documents published on 3 April 2018 include:

  • The information needed to register for the levy (Notice 1);
  • How to submit a return and pay the levy (Notice 2);
  • Calculating the sugar content of diluted soft drinks (Notice 3); and
  • The process for claiming tax credits for chargeable drinks that are exported, lost or destroyed (Notice 4).

The Guidance documents are available here.