Soft Drinks Industry Levy

April 2018

In the 2016 budget, the UK Government announced its plans to introduce a levy on soft drinks in an effort to reduce sugar consumption and promote healthier lifestyles for children. Producers and importers of soft drinks will be charged the levy on liable products from April 2018. 

What is the SDIL?

The SDIL aims to encourage producers to reformulate their soft drink products to reduce sugar levels. The SDIL fee is dependent upon the total sugar content of the drink.

The levy acts as an incentive for producers to reduce the sugar content in drinks, reduce portion sizes and shift sales towards sugar-free options.

Who pays the levy? 

A business must register if it: 

  • produces more than one million litres of liable drink in the last 12 calendar months for your own brand or brands you have the rights to manufacture
  • bottle, can or otherwise package liable drinks for someone else
  • bring liable drinks into the UK from anywhere else, including the Isle of Man and Channel Islands 

What products are liable?

A drink is liable if it meets all of the following conditions:

  • it contains at least 5g of sugar per 100 ml
  • It has a content of 2% alcohol by volume or less
  • It is ready to drink, or must be diluted with water, ice, carbon dioxide or a combination of these
  • It is packaged ready for sale
  • It has had sugar, or substance containing sugar, added during production (other than fruit juice, vegetable juice and milk)

The levy does not apply to drinks without added sugar such as pure fruit juices, drinks with a high milk content (at least 75%), milk substitutes, infant formula, or alcohol replacement drinks (e.g dealcoholised beer or wine).

I produce drinks that are liable for the levy, what do I need to do? 

Liable drinks must be reported to HM Revenue and Customs each quarter (i.e. June, September, December and March) and pay the levy due. This will commence in July 2018.

How much will producers pay?

The SDIL will be charged at the following rates:

  • 18p per litre if the drink has 5g of sugar or more per 100ml
  • 24p per litre if the drink has 8g of sugar or more per 100ml

For example, a 330ml can of soft drink that contains 10.6g of sugar per 100ml will incur a levy charge at the upper rate of 18p per litre, working out to 0.8p per can. 

How should I communicate this to customers? 

HMRC has advised that the levy is not a ‘consumer tax’ but a business may choose to pass it on. This is deemed to be a commercial decision, so it is entirely up to a business to decide whether or not they pass this cost onto the consumer, and then to decide how to communicate this.

What will the levy funds be spent on?

In England, the revenue raised by the SDIL will be used to fund programmes to encourage physical activity and balanced diets in children. For Scotland, Wales and Northern Ireland, the Barnett formula will be applied to spending on these new initiatives in the normal way.

Useful links

Soft Drinks Industry Levy:

Soft Drinks Industry Levy: 12 things you should know:

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