What is Soft Drinks Industry Levy & How to Register for It?

What is Soft Drinks Industry Levy?

Soft Drinks Industry Levy was first introduced in the year 2016, as sugar tax, which aimed to reduce the sugar content in the processed drinks such as cold drinks. However, it came into effect on 6th April 2018, so drinks which were produced and packaged before 6th April 2018 are not included in the levy. The rate of sugar tax is mentioned as per the sugar content of the beverages i.e. if the total sugar content of the drink is above 5g per 100 millilitres, the drink will be taxed at 18p per litre and if the total sugar content of the drink is above 8g per 100 millilitres will be taxed at 24p per litre. With Soft Drinks Industry Levy, United Kingdom government aimed to generate revenue of additional £1 billion per year, which was to be spent on UK sports schools. Apart from generating revenue from the same, sugar tax also aimed to cut down the obesity level of the United Kingdom, especially the younger generation, by about 1.3%.However not all beverages with sugar content is taxed under Soft Drinks Industry Levy and as per the proposal, drinks such as real fruit juices, milk-based drinks and the productions which are smallest in size are not supposed to be taxed under this.

For a drink to be taxed under sugar tax, it should have sugar in any of below mentioned forms, such as:

1. Sucrose
2. Glucose
3. Fructose
4. Lactose
5. Galactose and

Sugar replacements such as stevia, aspartame, sucralose and erythritol are not counted towards sugar content which means any drink with any of these will not fall under Soft Drinks Industry Levy.

After this tax was imposed on the beverages, A.G.Barr reduced the sugar content in their main product Irn-Bru. However, not everyone took this step of the UK government in positive stride and thus later faced lot of criticism in form of Member of Parliament Will Quince and named it as patronizing, regressive and the nanny state at its worst.

How to Find If Your Drinks Are Liable For the Soft Drinks Industry Levy?

You need to register for the Soft Drinks Industry Levy only if the drinks you produce, package and bring into the UK are liable for the same or not and in order to do so, you need to see if your drinks meet the below mentioned criteria:

1. Its alcohol level is 1.2% by volume (ABV) or less;
2. It is ready to drink directly or in diluted form i.e. if it is bottled, canned or packaged in any other form;
3. Sugar content is at least 5g per 100 millilitres either in ready or diluted form;
4. Sugar has been added to the drink during the time of production of the drink;
5. You can have the drink either diluted with water or mixed with crushed ice or mixed with carbon dioxide or a combination of these.

As per the proposal, the drinks such as real fruit juices, milk-based drinks, milk replacement drinks, alcohol replacement drinks etc and those who were produced and packaged before 6th April 2018 does not fall under Soft Drinks Industry Levy. Drinks on which Soft Drinks Industry Levy is not applicable are as below:

1. Drinks which are milk-based, which means:
1. It should contain at least 75% milk
2. It should contain milk from an animal
3. Buttermilk
4. Whey or recombined whey
5. Fermented milk
6. Reconstituted or recombined milk
2. Drinks designed with infant formula or baby foods;
3. Real fruit Juice, which includes:
1. Fruit puree
2. Dehydrated fruit juice
3. Powdered fruit juice
4. Drinks which are designed for cocktails, i.e. drinks which were designed to be mixed and served in an open container;
5. Drinks which are milk-replacement drinks, which means:
1. A milk replacement drinks should have at least 120 milligrams of calcium per 100 ml.
2. It should be derived from legumes, cereals, nuts, seeds or any other type of plant
3. Consistency of the drink should be same as that of milk;
4. It should not be carbonated
6. Drinks which are sold as powder;
7. Drinks meant for flavor such as those which are added to drinks such as coffee or cocktails.
8. Drinks which are considered as alcohol replacement drinks which means:
1. It should be sold and marketed as a replacement of a particular type of alcohol;
2. Its packaging should be same as that of the alcoholic drink it intends to replace;
3. The marketing strategy of the drink should be same as that of the alcoholic drink it intends to replace;
4. It should preferably target the age group below 18 years.

How to Register for the Soft Drinks Industry Levy

Once you have done your research, you need to register for the Soft Drinks Industry Levy in case your drink(s) falls under the defined parameters and for the registration of the same, you would need to have following details ready by your side, such as:

1. Your contact details;
2. Your Government Gateway account;
3. Your Unique Taxpayer Reference, also called as UTR and postcode;
4. The amount in litres, for respective bands, for all the drinks which you have produced over previous 12 months;
5. The amount in litres, for respective brands, for all the drinks which you intend to produce over next 12 months, which includes:
1. All the drinks which has your brand;
2. All the drinks packaged by you for your customers;
3. Drinks you will sell under your name;
4. Drinks which are brought into the UK and you are supposed to pay the levy for them.
6. Address of your production site;
7. Address of your registered warehouse where you store or intend to store your drinks.

However, it is important to note that you need to register for the Soft Drinks Industry Levy as per the guidelines laid by the UK government i.e. you should register for the same within:

1. 30 days of the end of the month you intend to package the drink for someone else;
2. 30 days of the date on which you have planned to produce, in the next 30 days, over one million litres of the mentioned drink in the past 12 months, which also includes those drinks which were produced before 6th April 2018;
3. 30 days of the end of the month in case you have produced over one million litres of the mentioned drink in the past 12 months, including those drinks which were produced before 6th April 2018;
4. 30 days of the date you are aware of the due levy on the drinks which were brought in the UK;
5. 30 days of the end of the month in which the levy become due on the drinks which were brought in the UK;

And, in case you fail to register for the same within the defined timeline of Her Majesty’s Revenue and Customs (HMRC), you will be charged with a penalty because failing to do so is observed as an offence and if proved guilty, you could be charged with following consequences:

1. A prison term of not more than 12 months, which in case of Northern Ireland is 6 months;
2. A fine not exceeding £20,000 or thrice the amount of the levy amount due on you or a combination of both, the former and the later one.

Once you have registered under Soft Drinks Industry Levy, you can cancel the same if there is no further requirement for you to be registered by submitting your request to HMRC. You can do the same by signing in to the Soft Drinks Industry Levy Service using your Government Gateway Account as well.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.