The sugar tax currently applied to fizzy drinks could soon be extended to milkshakes and similar products under new government proposals revealed on Monday.
The Treasury launched a consultation on plans to remove the exemption for dairy-based drinks—and their non-dairy alternatives such as oat and rice milk—bringing them under the scope of the soft drinks industry levy (SDIL). The government is also considering tightening the sugar threshold that triggers the levy, lowering it from 5g to 4g per 100ml.
Chancellor Rachel Reeves first indicated last year that the government would consider broadening the scope of the levy. The Treasury has now confirmed its intention to move ahead with the changes, citing health concerns over the high sugar content of many milk-based drinks.
According to government analysis, about 203 pre-packed milk-based drinks currently on the market—accounting for 93 per cent of the category’s sales—could be affected unless manufacturers reduce their sugar levels.
The SDIL was introduced in 2018 by the Conservative government as part of a broader anti-obesity drive. Milk-based drinks were originally exempted due to concerns over the importance of calcium intake, particularly for children. However, the Treasury now says that such drinks contribute only 3.5 per cent of young people’s calcium intake, suggesting that the potential health benefits of their consumption are outweighed by the risks posed by excess sugar.
“By bringing milk-based drinks and milk substitute drinks into the SDIL, the government would introduce a tax incentive for manufacturers to build on existing progress and further reduce sugar in their recipes,” a Treasury spokesperson said.
Following the introduction of the SDIL, 89 per cent of fizzy drinks sold in the UK were reformulated to avoid the tax, significantly reducing their sugar content.
However, the proposal has drawn criticism from some quarters. Christopher Snowdon, head of lifestyle economics at the free-market thinktank the Institute of Economic Affairs, said: “The sugar tax has been such a dramatic failure that it should be repealed, not expanded. Sugar taxes have never worked anywhere. What happened to Starmer’s promise to not raise taxes on working people?”
The government’s consultation on the proposed changes is open and will run until 21 July, inviting views from industry stakeholders, public health groups and the wider public.
Read more:
Milkshakes could face sugar tax under Treasury plans to expand levy