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UK sugar tax confirmed in Budget 2017

By Rachel Arthur+

08-Mar-2017
Last updated on 08-Mar-2017 at 17:12 GMT2017-03-08T17:12:30Z

UK sugar tax confirmed in Budget 2017

A UK sugar tax has been confirmed as part of the government’s Budget 2017 today, with the rates set for the two-tier soft drinks industry levy.

Meanwhile, duty rates on beer, cider, wine and spirits will increase by RPI inflation: disappointing industry bodies who had pushed for the government to support their sectors with a cut in duty as Brexit looms.

Sugar tax

The UK’s soft drinks industry levy was announced in last year’s Budget and again confirmed in today’s Budget 2017. Draft legislation for the tax was published in December last year.

Today’s budget confirms a two-tier levy: The levy rate for added sugar drinks with a total sugar content of 5g or more per 100ml will be set at 18 pence per liter; and those with 8g or more per 100ml will be set at 24 pence per liter. 

In announcing the levy rates, Chancellor Philip Hammond said the revenue forecast for the tax has gone down due to producers' reformulation efforts. 

"Unusually for a Chancellor, I am delighted to announce a reduction in the expected yield of a tax – the soft drinks levy," he said.

"I can confirm today the final rates of 18 and 24 pence per liter for the main and higher bands respectively.

"But producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax. This is good news for our children."

The British Soft Drinks Association (BSDA) supports the need to address public health challenges, but says there is no evidence that taxing a single product or ingredient works.

Responding to today’s Budget, Gavin Partington, BSDA Director General, said: “Given current increases in cost of goods, we're surprised the Treasury wishes to put more pressure on businesses and raise prices for hard-pressed consumers.

“It's also ironic that the tax hits the soft drinks category, which has led the way in helping consumers reduce sugar intake - down nearly 18% since 2012.  We are also the only sector with a calorie reduction target for 2020.”

Children's Food Campaign: 'Welcome news that the Chancellor has held his nerve'

Public health campaign group Action on Sugar, however, welcomes the levy and urges manufacturers to reformulate to avoid it.

Jenny Rosborough, a registered nutritionist and Campaign Manager at Action on Sugar, said:“We are fully supportive of the sugar tax levy and the commitments we’ve already seen from a growing number of drink manufacturers who’ve started to reduce sugar to less than 5% across popular brands.

“Sugar-sweetened drinks are the biggest contributor of sugar in the diets of children and teenagers and, unless they are reduced, these drinks will still contribute to the high levels of obesity, type 2 diabetes and tooth decay, all of which are preventable and cost the NHS billions of pounds each year.”

The government says the soft drinks industry levy aims to tackle childhood obesity, and the Children's Food Campaign welcomes the rates that have been set.

Malcolm Clark, co-ordinator of Children's Food Campaign, said: “It is welcome news that the Chancellor has held his nerve and kept the levy rates at the meaningful levels originally proposed. 

"The prospect of those rates has already led to significant sugar reduction moves, and had a positive ripple effect on other sectors."

Beer, wine and spirits

Duty rates on beer, cider, wine and spirits will increase by RPI inflation, coming into effect on March 13.

The Wine & Spirits Trade Association (WSTA) had been calling for 2% cut in duty on wine and spirits, warning that UK wine businesses are reeling from the triple impact of historically high duty rates, higher inflation and the devaluation of the pound.

Miles Beale, chief executive of the WSTA, said: “It is disappointing that the Chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.

“Between Brexit’s impact on the pound and rising inflation, wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help struggling consumers.

“The added uncertainty of another Budget in six months’ time is unwelcome and will further undermine business – and consumer - confidence.”

The government will also consult on introducing a new duty band for still cider just below 7.5% ABV to target white ciders; as well as the impact of introducing a new duty band for still wine between 5.5% and 8.5%. 

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