Hospitality industry disappointed by government’s sugar tax strategy

05 Sep 2016

The UK's proposed new Soft Drinks Industry Levy (SDIL), nicknamed the “sugar tax” by the media and online when it was announced at the 2016 Budget, "will come as an additional tax on pubs," says Brigid Simmonds, Chief Executive of the British Beer and Pub Association.

The Government recently launched a consultation on the SDIL, which forms part of its broader Childhood Obesity Strategy. The levy directly targets the producers and importers of sugary soft drinks who will need to pay a charge for drinks with added sugar, and total sugar content of five grams or more per 100 millilitres - about 5% sugar content.

"Whilst this is a strategy aimed at targeting childhood obesity," says Brigid Simmonds, "we are concerned that some measures contained in the report will ultimately increase the tax burden on pubs and put up prices of soft drinks for pubgoers." She went on to warn that, with beer duty and business rates (property tax) already significantly impacting the hospitality industry, businesses may find themselves even more squeezed by this further increase in the already high level of taxation.

To add to the concerns, research commissioned by the British Soft Drinks Association and carried out by Oxford Economics, shows that the introduction of the SDIL could result in 4,000 job losses and a GBP132m reduction in the GDP contribution of the industry.

In response to these findings and the consultation paper, Gavin Partington, Director General of British Soft Drinks Association (BSDA), says: "Given the economic uncertainty our country now faces, we're disappointed the Government wishes to proceed with a measure which analysis suggests will cause thousands of job losses and yet fail to have a meaningful impact on levels of obesity."

At Beavis Morgan, we have extensive experience of working with clients in the hospitality sector and our professionals are acknowledged experts in issues affecting organisations operating in this area. If you would like to discuss how best to structure your business for tax and how we can help you improve business performance, contact Matthew Burge or your usual Beavis Morgan Partner.