Milk-based and milk substitute drinks with a high sugar content will become subject to the soft drinks industry levy (SDIL) from 2028 in a move long called for by health campaigners.
Drinks such as packaged supermarket milkshakes, flavoured milks, sweetened yoghurt drinks, chocolate milk drinks and ready-to-drink coffees have previously been excluded from the levy but will fall under its scope from January 1st 2028, the government confirmed in this week’s budget.
The move means plant-based drinks with added sugar will also come into scope of the SDIL.
For milk based drinks, a ‘lactose allowance’ will be introduced to account for the naturally occurring sugars in milk.
Unpackaged sugary drinks served outside of the home will remain beyond the scope of the SDIL, including open cup milkshakes served in cafes and restaurants.
The long lead-in period is designed to give manufacturers the opportunity to reformulate products so that they fall below the threshold of the tax. That threshold has been reduced from 5g to 4.5g, a smaller reduction that the 4g originally proposed in a government consultation.
A summary of consultation responses published by the government noted how soft drinks manufacturers and trade bodies had expressed disappointment with the proposed lowering of the threshold which they claimed was “moving the goalposts” with proposals that require additional reformulation investment. Since the SDIL was first introduced, reformulated soft drinks have clustered below the original 5g threshold in order to avoid paying the tax.
The government said the new measures strike the appropriate balance between supporting health objectives and fostering conditions that allow the soft drink industry to continue to grow and invest.
Once implemented, the changes are expected to raise £40m a year and are estimated to add £1bn in health and economic benefits, according to the government.
The levy has so far seen the average sugar content of drinks in scope fall almost 50% since it was introduced, the government said.
