The UK government has launched a public consultation on proposals to expand the Soft Drinks Industry Levy (SDIL), commonly known as the sugar tax, to include milkshakes and other milk-based drinks. The measures, unveiled on Monday, would remove current exemptions for dairy and plant-based beverages, such as oat, rice and soya drinks, bringing them in line with existing taxed products like fizzy drinks.
The Treasury is also considering reducing the threshold at which the levy applies from 5g of sugar per 100ml to 4g per 100ml. Officials point to growing public health concerns over sugar consumption and its link to obesity, type 2 diabetes and dental decay, particularly among younger age groups. Data from the NHS notes that nearly one in three children leaving primary school are overweight or obese, prompting repeated calls for more aggressive action to curb sugar intake.
Chancellor Rachel Reeves signalled last year that the scope of the levy could be widened, and the latest move confirms the government’s intent to follow through. The Treasury argues that milk-based drinks are frequently high in added sugars and are therefore contributing to children’s excessive sugar intake, despite originally being exempted due to their calcium content.
A spokesperson for the Treasury said: “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.”
According to government figures, around 203 pre-packed milk-based drinks currently on sale in the UK—representing 93% of sales in that category—would be subject to the levy unless manufacturers reformulate them to reduce sugar. This includes popular flavoured milkshakes, iced coffee drinks and certain high-sugar dairy alternatives. Non-dairy drinks such as oat and rice milk would also be included under the new proposals.
First introduced in April 2018 by the Conservative-led government, the SDIL formed part of a nationwide anti-obesity strategy designed to encourage manufacturers to lower sugar levels across their product lines. The levy is charged in two bands: 18p per litre for drinks with sugar content between 5g and 8g per 100ml, and 24p per litre for those with more than 8g. Since its introduction, more than 90% of soft drinks have been reformulated to avoid the tax, according to figures from Public Health England prior to its dissolution.
Despite public health experts praising the levy’s impact, the proposed expansion has drawn criticism from some think tanks and free-market advocates. Christopher Snowdon, head of lifestyle economics at the Institute of Economic Affairs, dismissed the initiative as ineffective, saying: “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?”
However, research suggests otherwise. A 2023 study published in the BMJ indicated that the sugar tax led to a 30% reduction in household sugar purchases from soft drinks following its implementation, without harming industry revenue or employment. Likewise, organisations such as Action on Sugar have consistently lobbied for taxing high-sugar drinks beyond carbonated beverages, pointing to their popularity among children and teenagers.
The Treasury argues that excluding milk-based drinks from the current levy has created an inconsistency which could undermine the government’s wider strategy to improve public health. It also noted that these drinks contribute only 3.5% of the recommended calcium intake for young people on average, challenging earlier assumptions that justified their exemption for nutritional reasons.
The consultation will remain open until 21 July 2025, inviting responses from the food and drink industry, public health organisations, and individual members of the public. Following review, the government will determine whether to proceed with the proposed changes via legislation.
In the interim, industry leaders are advising manufacturers to consider reformulating products or reviewing their marketing strategies in anticipation of the potential expansion of the levy.
More details on the government’s consultation can be found via the UK Government website, and the announcement coincides with renewed efforts to tackle obesity in the UK—an issue estimated to cost the NHS over £6 billion annually.
