Soft Drinks Industry Levy - concentrates mixed with added sugar when dispensed
Published 15 March 2023
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Who is likely to be affected
UK producers and importers of soft drink concentrates used in fountain machines that contain separate packaged concentrates and sugar, which are only mixed when dispensed, and retailers using these machines.
General description of the measure
Consultation with industry members identified an opportunity to close a minor technical loophole within the Soft Drinks Industrial Levy (SDIL), improving the consistency of its application. This measure extends the definition of a soft drink liable to the SDIL to include packaged concentrates which are mixed with sugar when dispensed from a soft drink fountain machine.
The measure will bring consistency by incorporating concentrates which are mixed with sugar and diluted by a fountain machine to dispense a drink containing a total sugar content of 5 grams or more per 100 millilitres within the SDIL.
This means existing SDIL rules, including registration, rates, accounting, and payment, will apply to producers and importers of concentrates manufactured for that purpose.
Policy objective
The measure will bring greater consistency to the application of the SDIL.
Background to the measure
HMRC and HM Treasury launched a consultation on the design and implementation of the SDIL in August 2016 and set out a response confirming the broad policy approach. The SDIL came into effect in April 2018.
The SDIL applies to packaged soft drinks with added sugar containing at least 5g of sugars per 100ml. Producers, manufacturers, and importers of liable soft drinks must register, report, and pay the SDIL on the volume of liable soft drinks packaged in, and imported into, the UK. This measure will bring consistency across the soft drinks industry by making all packaged concentrates used in fountain machines, regardless of which stage sugar is added, in the scope of the SDIL. Research indicates that the supply of these fountain machines is limited to a small number of producers in the UK, indicating the impact to be minimal. The revenue this measure is expected to raise is negligible.
Draft legislation was published for technical consultation on 20 July 2022 and received minimal stakeholder feedback.
Detailed proposal
Operative date
This measure will take effect from 1 April 2023.
Current law
Current law is contained in Part 2 of Finance Act 2017.
Proposed revisions
Legislation will be introduced in Spring Finance Bill 2023 to amend Part 2 of Finance Act 2017. These amendments will bring into scope liquid flavoured concentrates that are manufactured in or imported into the UK to be used in fountain (dispensing) machines that combine added sugar with the concentrate when the soft drink is dispensed. Powers to make regulations will be included to provide the appropriate flexibility for future changes.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2022 to 2023 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| — | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impact.
Impact on individuals, households and families
This measure is expected to have a positive impact on the health of individuals in the UK. Excess sugar consumption is associated with obesity and excess weight, which increases the likelihood of individuals developing a wide range of serious health problems, such as type 2 diabetes, heart disease and a number of cancers. These health conditions can have major costs for individuals and families and can reduce individuals’ quality of life and ability to work.
The financial impact of this measure on individuals and households will depend on whether the charge is passed onto the consumer.
This change is not expected to directly impact on family formation, stability, or breakdown.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses who produce and import concentrates used in fountain machines where the concentrate is mixed with sugar when dispensed. One-off costs could include familiarisation with this change. Continuing costs include completing SDIL returns for liable concentrates that are mixed with sugar in fountain machines when dispensed, alongside any existing SDIL return declarations. This measure is not expected to impact on civil society organisations.
Customer experience is expected to remain broadly the same as this measure does not change how businesses interact with HMRC.
Operational impact (£m) (HMRC or other)
This measure does not have any operational and delivery impact.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from returns and receipts and feedback from stakeholders.
Further advice
Find out more information about the Soft Drinks Industry Levy.
If you have any questions about this change or wish to comment on the draft legislation, please email: vatispolicydesign@hmrc.gov.uk