326 soft drinks makers hit by sugar tax

The soft drinks industry levy was introduced on 6 April and taxes manufacturers 18p per litre produced in the drink has 5g of sugar per 100ml, and 24p per litre for more than 8g of sugar,.

The measure was expected to raised £520m a year to pay for school sports.

However, UHY Hacker Young said the Government has recently revised down its expected income from the levy to £240m, as many soft drinks manufacturers have reformulated their products.

This includes AG Barr, which recently reformulated Irn-Bru to reduce sugar content from 10.3g per 100ml to 4.7g per 100ml.

Complex tax system​

AG Barr, which also owns Rubicon and Bundaberg, said 99% of its products are now not subject to the sugar tax.

The Government said that it will take the money from other Government budgets to ensure the full £520m is made available from school sports.

UHY Hacker Young said that while the reaction of soft drinks manufacturers to the levy has been a positive one, targeted taxes of this type run the risk of gradually adding to red tape and complexity in the tax system.

Noble aims​

UHY Hacker Young partner and head of the drinks industry team James Simmonds 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.

“It is 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.”