Short answer
Toasting, raising and clinking glasses and saying 'cheers' over a drink, is a custom from alcohol drinking, so Hanafi scholars say Muslims should avoid it even with water or juice. Saying 'cheers' as British slang for 'thanks' or 'bye' is fine. The Muslim way is to say Bismillah before drinking and Alhamdulillah after.
Drinking a lawful drink in the style of wine drinkers, such as toasting and clinking glasses, is makruh because it imitates the people of sin. Using the word 'cheers' to mean thank you carries no harm.
The four schools agree on this.
Explanation
The toast grew out of drinking culture: raising a cup of wine to someone's health, clinking glasses and drinking together. The Hanafi jurists said that drinking even a lawful drink in the manner of wine drinkers, passing it round as they do, is makruh, because it imitates the people of sin. The Prophet ﷺ said that whoever imitates a people is one of them.
So at a wedding, an office party or a family dinner, you do not need to raise a glass of juice and clink it when others toast. You can smile, nod and drink normally, or say a short dua for the couple or the occasion. If you are asked why, a simple 'I don't toast, but congratulations!' is enough.
The word itself is another matter. In Britain and Australia 'cheers' is everyday slang for 'thanks' or 'bye', with no link to drinking in the speaker's mind. Using it that way is fine. The concern is the drinking ritual, not the word.
Better habits from the sunnah:
- Say Bismillah before you drink and Alhamdulillah after.
- Drink with your right hand, sitting, in a few sips.
- Instead of 'cheers' at a celebration, say 'Barakallahu feek' or 'MashaAllah'.
- Avoid sitting at a table where alcohol is being served, which is a more serious issue. See can a Muslim go to a pub.
Other schools also warn against imitating drinking gatherings, though they may not use the same detail. See also is non-alcoholic beer halal.
The evidence
Quran, Surah Al-Maaida 5:90
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ إِنَّمَا ٱلْخَمْرُ وَٱلْمَيْسِرُ وَٱلْأَنصَابُ وَٱلْأَزْلَٰمُ رِجْسٌۭ مِّنْ عَمَلِ ٱلشَّيْطَٰنِ فَٱجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ ﴿٩٠﴾
O you who have believed, indeed, intoxicants, gambling, [sacrificing on] stone alters [to other than Allah], and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful.
Alcohol and its gatherings are from the work of Shaytan, so their customs are avoided.
Sunan Abi Dawud 4031
Graded hasan sahih... من تشبه بقوم فهو منهم ...
"Whoever imitates a people is one of them."
Toasting imitates the customs of drinkers.
Where the ruling is recorded
- Radd al-Muhtar (Ibn Abidin), Kitab al-Ashriba. Drinking a lawful drink in the manner of wine drinkers is disliked because it imitates them.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.