[co-author: Julia Fraser]

The UK tax authority HM Revenue and Customs (HMRC) has published draft Regulations setting out further details on the new UK ‘Soft Drinks Industry Levy’, which will apply from 6 April 2018.

The new levy applies to all soft drinks packaged in or imported to the UK that contain added sugar and at least 5 grams of sugar in total (both naturally occurring and added sugar) per 100ml of prepared drink (“chargeable drinks”). A levy of 18p per litre will apply, rising to 24p per litre for chargeable drinks containing 8 grams or more of sugar per 100ml.

Companies that produce, package or receive imported chargeable drinks will need to register with HMRC and keep detailed records of products that are subject to the levy. There is an exemption for companies that produce fewer than 1 million litres of chargeable soft drinks in the relevant tax year.

The draft Regulations provide further details as to how the levy will be applied in practice, including:

• definitions of fruit juice, vegetable juice and milk for the purposes of determining the source of added sugar (as the levy does not apply if the source of added sugar is solely from these ingredients);
• how HMRC will calculate the sugar content of drinks intended to be diluted (e.g. cordials) in the absence of a serving dilution ratio on the packaging or where it believes that the suggested ratio has been set specifically to avoid the tax;
• details of the registration process, the procedure for submitting returns to HMRC and the payment of charges; and
• the procedure for claiming tax credits in relation to chargeable drinks that are exported from the UK or lost or destroyed.

The draft Regulations are available here and the consultation closes on 8 December 2017.