The soft drinks levy has not raised as much tax as was expected, the Chancellor has revealed.
Phillip Hammond confirmed that producers are already reformulating sugar out of their drinks, which means lower revenues for HMRC.
Commenting that “this is good news for our children”, he confirmed a two-tier levy of 18p per litre on drinks with 5g of sugar per 100ml and of 24p per litre on drinks with more than 8g per 100ml.
The Chancellor also announced that there would be no changes to previously planned increases on duties on alcohol and tobacco, which will increase in line with Retail Prices Index (RPI) inflation.
Duty rates on all tobacco products will increase by 2% above RPI inflation from 6pm today.
The government also plans to introduce a Minimum Excise Tax for cigarettes to target the cheapest tobacco. The rate, which will be set at £268.63 per 1,000 cigarettes, will take effect from 20 May 2017.
From 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI inflation.
There was also potentially bad news for drinkers of white ciders, with the government consulting on introducing a new duty band for still cider just below 7.5% alcohol by volume (abv). It will also consult on the impact of introducing a new duty band for still wine and made wine between 5.5% and 8.5% abv. Made wine is any drink – apart from beer or cider – containing alcohol that is made by fermentation, rather than by distillation or any other process. Mead, for example, is classed as made-wine.