The Government and health campaigners hope the new measure will cause a significant decline in obesity.
How does it work?
The tax will apply to manufacturers who can pass it on to retailers and customers.
Soft drinks containing more than 5g of sugar per 100ml will pay a levy of 18p a litre to the Treasury.
If the sugar content is over 8g per 100ml, the tax will rise to 24p a litre.
Fruit juices that do not carry added sugars will be exempt from paying the levy as will milk products.
However, former Chancellor George Osborne has said this could change in the future.
Speaking to BBC Two's Newsnight he said: "I suspect the sugar tax will start to be extended to things like milk products, which I was nervous of going into in the first instance because I wanted to establish the case for a sugar tax."
Obesity related hospital admissions last year, according to NHS Digital.
Why are the Government introducing the tax?
The move aims to help tackle childhood obesity. Sugar-sweetened soft drinks are now the single biggest source of dietary sugar for children and teenagers.
A child in England has a rotten tooth removed in hospital every ten minutes according to Public Health England.
Last year alone there were 617,000 obesity related hospital admissions, NHS Digital have said. Of these,10,705 admissions recorded obesity as the main cause.
It is hoped the tax will encourage drinks companies to cut down on the amount of sugar in drinks, and consumers to choose lower sugar alternatives.
What has been the industry's response?
More than 50% of manufacturers have changed their formulas to cut sugar, according to figures last month from the Treasury.
cut its sugar content from 10 grams to less than 4.5 grams per 100ml
Ribena cut its sugar content from 10 grams to less than 4.5 grams per 100ml while Lucozade has reduced it from 13 grams to less than 4.5 grams.
cut sugar in a can from 8.5 teaspoons to four.
Irn-Bru is also one of the big name brands to change its recipe, cutting the sugar in a can from 8.5 teaspoons to four despite a consumer backlash and reports that fans were stockpiling cans and bottles of the original.
Coca-Cola and Pepsi however, are yet to make changes to their recipes.
Stores such as Tesco have also reformulated all of its own-label soft drinks to come in below the threshold for the levy, as have Morrisons, Asda and The Co-op.
How have customers responded?
Analysts Mintel have found it is likely to have an effect on 47% of consumers, with that figure rising to 53% of 16 to 34-year-olds.
However, not everyone has been a fan of the newly added sweeteners.
Will the sugar tax work?
A similar scheme has been tried in a handful of Scandinavian countries as well as France and Hungary.
In 2014 Mexico also introduced a sugar tax levy on soft drinks and it has proved to change consumer behaviour.
Researchers found there was a 5.5% drop in sugary drink purchases in the first year after the levy was introduced. This increased to a 9.7% decline in the second year.
Norway's sugar tax has been in effect since 1922, which it increased earlier this year.
But the measure has reportedly resulted in Norwegians travelling across the border to Sweden, where there is no sugar tax, to get there sweets.
What will the proceeds of the tax be used for?
The money will help fund healthy school breakfast clubs and be reinvested in sport in schools.
If revenue from the levy drops, the Government said funding for schools and children will stay the same.
How much sugar do popular soft drinks contain?
35g in a 330ml can Coca-Cola classic.
36g per 330 ml can of Pepsi.
15g per 330 ml can of Fanta Orange.
27g per 250 ml can of Red Bull Energy Drink.
What is the recommended level of sugar?
Added sugars shouldn't make up more than 5% of a person's calorie intake from food and drink each day, according to the NHS Choices website.
This is about 30g of sugar a day for those aged 11 and over.