16 Mar 2016

Sugar tax on soft drinks announced by Osborne

Chancellor George Osborne says a levy will be introduced in two years’ time, with higher rates for the most sugary drinks.

A sugar tax on soft drinks will be levied on fizzy drinks companies will raise £520m for primary school sports, Mr Osborne said.

However juices are to be exempt from the tax which be applied directly on manufacturers.

The new tax, which campaigners including Jamie Oliver have been pushing hard for in recent years, will come into effect in two years’ time, giving manufacturers time to reduce sugar in their products.

There will be two bands – one for total sugar content above five grams per 100 millilitres and a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres.

Pure fruit juices and milk-based drinks will be excluded, and the smallest producers will have an exemption from the scheme.

Key announcements:

  • Sugar tax on sweet drinks
  • Lifetime ISA which will give £1 for every £4 saved
  • Beer, wine and spirit duty frozen, tobacco tax up 3 per cent
  • New stamp duty rule expanded to larger investors
  • Higher rate income tax threshold raised to £45,000
  • Personal allowance for income tax raised to £11,500 from April 2007

Mr Oliver welcomed the news on Twitter: “A profound move that will ripple around the world ….business can not come between our Kids health !! Our kids health comes first.”

‘Political theatre’

But Ian Wright, director general of the Food and Drink Federation, said: “We are extremely disappointed by today’s announcement of a new tax on some of the UK’s most successful and innovative companies. For nearly a year we have waited for an holistic strategy to tackle obesity. What we’ve got today instead is a piece of political theatre.

“The imposition of this tax will, sadly, result in less innovation and product reformulation, and for some manufacturers is certain to cost jobs.”

Many sugary natural juices contain more sugar, gram for gram, than fizzy drinks such as Coca Cola or Iron Bru. Coca Cola contains 10.6g per 100ml, Iron Bru contains 10.3g, and both will come under the sugar tax.

Juices and smoothies, which are often lunchbox favourites and can contain up to 14g of sugar per 100ml, will not.

Experts have previously said that a tax that differentiates between naturally occurring sugar and refined sugar could skew the market towards fruit juices without tackling the obesity crisis.

Action On Sugar (AOS) found more than a quarter of the juices, smoothies and fruit drinks they looked at had the same amount of sugar or more than Coca-Cola’s 10.6g for every 100ml.

The survey of 200 drinks looked specifically at juices that were aimed at children or marketed as lunchbox-friendly.

However, the British Soft Drinks Association (BSDA) has said fruit juice consumption in the UK equated to an average of just 45ml per person per day – accounting for 1 per cent of the calories in the average British diet.


Mr Osborne said: “I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing’. So today I can announce that we will introduce a new sugar levy on the soft drinks industry.”

“It will come into force in two years, based on the volume of sugar, two bands: those with 5g per 100ml and those with more than 8g per 100ml, pure fruit juices and milk-based drinks excluded. It will raise £520m.”

Chris Askew, Diabetes UK Chief Executive, said “It is really promising news that the Government has announced a tax on the soft drinks industry. We have been campaigning for this measure as we are all consuming too much sugar.

“This is contributing to the huge rise we are seeing in the numbers of people who are overweight and obese, and therefore at increased risk of Type 2 diabetes. There are already around 3.6 million people in the UK with Type 2 diabetes. This is already a huge health and economic burden for individuals and health systems.”