Since the UK government introduced a ‘sugar tax’ on fizzy and sugary drinks in 2018, it has recorded a 46% drop in sugar levels in those products. Now it wants to do the same for other sweetened drinks sitting on UK store shelves and in kitchen cupboards.
On Tuesday, the government announced an extension to the Soft Drinks Industry Levy to include milk-based and plant-based drinks that are high in added sugar, in a move that will force many drinks companies to decide between absorbing the new cost or reformulating their offerings.
“The levy has already shown that when industry cuts sugar levels, children’s health improves. So, we’re going further,” Health and Social Care Secretary Wes Streeting said when the policy was announced. “A healthier nation will mean less pressure on our NHS, a healthier economy and a happier society.”
The new tax will be applied to products such as flavoured milks, sweetened yoghurt drinks, milkshakes and ready-to-drink coffees – including those made with soya, oat and almond alternatives – from January 2028. It does not apply to open-top drinks served in cafés and restaurants.
The sugar threshold at which the levy is triggered will also fall from 5g to 4.5g per 100ml, a move ministers say could cut 17mn calories a day from national consumption and help tackle obesity, cancer and heart disease.
Drinks containing between 4.5g and 7.9g of total sugar per 100ml fall into the lower levy band at 19.4p per litre, while products above 8g face a charge of 25.9p per litre. That could squeeze margins unless companies reduce the sugar content in their drinks or raise their retail prices.
Children’s health campaigners have welcomed the move. “This update rightly prioritises children’s health over corporate profit,” said Barbara Crowther, children’s food campaign manager at the charity Sustain, in a statement. “Companies who’ve already reduced sugar will now be rewarded for acting responsibly, whilst those still stacking excess sugar into milkshakes will now have a clear choice: change their recipe or pay for the health harm caused.”
Industry group Dairy UK expressed disappointment at the tax extension, stating that milk- and yogurt-based drinks help provide essential nutrients including calcium, protein, B vitamins and iodine.
However, the group welcomed the policy’s “lactose allowance”, which excludes levels of the naturally occurring sugar from the total eligible for tax. “As an industry we support the drive to better public nutritional health and our members will continue to deliver reductions in sugar through reformulation to support healthier choices for the public,” said Dairy UK chief executive Judith Bryans in a statement.
Companies currently offering sugary milk- and plant-based drinks might consider getting an early on developing lower-sugar recipes to sell in the UK. Meanwhile, those already focused on low- or no-added-sugar products could gain an advantage.
To ease potential concerns about costs and reformulation challenges, the UK government offered reassurance that the tax would not impact sales.
According to data from the Department of Health and Social Care, sales of products affected by the current levy grew 13.5% between 2015 and 2024, “demonstrating strong consumer acceptance and the commercial viability of healthier reformulated beverages.”