According to data held by national accountancy group UHY Hacker Young, Her Majesty’s Revenue and Customs (HMRC) has confirmed that 326 soft drinks manufacturers have been affected by the Soft Drinks Industry Levy, or ‘sugar tax’. Concerns about the legislation broadening in scope have been laid to rest for now however, as the William Grant & Sons distillery’s 2018 market report shows there are currently no plans for the tax to be implemented on alcoholic spirits.

Implemented at the beginning of April, the Soft Drinks Industry Levy taxes manufacturers 18p per litre produced if the drink contains 5 grams of sugar per 100ml, and 24p per litre for more than 8 grams of sugar. Initial expectations were that the tax would produce £520m a year, with the money to be used to help fund sports programmes and breakfast clubs in schools. The tax has seen the UK join a small group of nations implementing similar legislation, including Mexico, France and Norway.

“The evidence of health benefits from these taxes is relatively limited, but the sugar tax certainly adds to the burden of cost and red tape for businesses.”

James Simmonds, partner at UHY Hacker Young and head of the firm’s drinks industry team, said: “Targeted taxes like the sugar tax might have very noble aims, but they do run counter to the aim of simplifying the tax system.

“The evidence of health benefits from these taxes is relatively limited, but the sugar tax certainly adds to the burden of cost and red tape for businesses.”

The success of the tax has already been brought into question, with expected income recently revised to £240m. The revised income is due to large-scale reformulations of products on the part of soft drinks manufacturers, with several of the more prominent soft drinks having their sugar levels reduced dramatically. Among them, AG Barr recently reformulated Irn-Bru to reduce sugar content from 10.3g/100ml to just 4.7g/100ml. The company claims that 99% of its products are now not subject to the sugar tax.

While neither Coca-Cola nor Pepsi has reformulated, Coca-Cola did announce earlier in the year that it would reduce the size of its 1.75l bottle to 1.5l and put up the price by 20p (the refusal to reformulate was reputedly due to customer demand for the classic recipe). By contrast, Ribena’s sugar per 100ml was cut from 10g to less than 4.5 and Lucozade similarly reduced from 13g per 100ml to less than 4.5.

Simmonds added: “It’s good to see the soft drinks manufacturers responding so positively to the new tax – reducing sugar levels in drinks makes sense financially, given the potential cost of the Levy. It does remain to be seen how the Government will make up the £280m shortfall in money for school sports, however.”

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The government has said that money will be taken from other budgets to ensure the full figure is met for the sports programmes, but also praised the fact that the tax has forced manufacturers into reformulating already. In Mexico, the tax (which operates similarly to the UK’s levy) saw 12% less sugary beverages consumed in the first full year of implementation than the year leading up to the tax’s introduction. It still remains to be seen however whether such taxes lead to a reduction in obesity.