HMRC expands scope of soft drinks industry levy

8th September 2022

HM Revenue and Customs (HMRC) has published draft legislation and a policy paper outlining a new measure that amends the scope of soft drinks which are liable to pay the Soft Drinks Industry Levy. The scope will now include packaged concentrates which are mixed with sugar at the point at which the drink is dispensed from a fountain machine.

What is the background?

HMRC and HM Treasury launched a consultation on the design and implementation of the Soft Drinks Industry Levy in August 2016 and the levy came into effect in April 2018 via Part 2 of the Finance Act 2017.

The Soft Drinks Industry Levy applies to packaged soft drinks containing at least 5g of sugar per 100ml of drink. Producers, manufacturers, and importers of liable soft drinks must register, report, and pay the levy on the volume of liable soft drinks packaged in, and imported into, the UK.

What are the new measures and who will be affected?

According to HMRC, the new measures will bring consistency across the soft drinks industry by making all packaged concentrates used in fountain machines, regardless of which stage sugar is added, fall within the scope of the Soft Drinks Industry Levy.

UK producers and importers of soft drink concentrates and retailers using these machines will be affected by the new legislation. It is thought that the impact of the new measure will be minimal since research indicates that the supply of these fountain machines is limited to a small number of producers in the UK.

How and when?

Legislation will be introduced in the Finance Bill 2022-23 to amend Part 2 of Finance Act 2017. The amendments will bring into scope liquid flavour concentrates that are manufactured in or imported into the UK to be used in fountain machines that combine added sugar with the concentrate(s) when the drink is dispensed.

The amendment will come into force from 1 April 2023.