UK Government to Expand Sugar Tax to Milkshakes and Sweetened Drinks Ahead of Budget
The government will widen the Soft Drinks Industry Levy (SDIL) to include sweetened milk-based and milk-alternative drinks, marking the most significant overhaul of the sugar tax since its introduction seven years ago. The decision comes days before the Chancellor delivers the budget, forming part of a broader attempt to project fiscal discipline and address rising public-health costs.
Under the new rules, the levy’s threshold will drop from 5g to 4.5g of added sugar per 100ml, bringing products such as milkshakes, flavoured coffees, sweetened plant milks and refrigerated “grab-and-go” beverages into scope from January 2028. The government says the long lead time allows manufacturers to reformulate products and adjust their supply chains with minimal disruption.
Renewed Public-Health Push
Ministers argue the change is driven by mounting NHS pressure linked to obesity, diabetes and tooth decay. Health experts have repeatedly criticised the exclusion of sweetened milk drinks, noting that many contain more sugar than the soft drinks already taxed. Industry data suggests the original SDIL contributed to a significant reduction in sugar consumption; officials hope to replicate that effect across a wider segment of the drinks sector.
Industry Pushback
Manufacturers warn the expansion could force higher consumer prices, reduced product ranges and millions in reformulation costs. Trade groups argue the policy unfairly targets drinks that also include protein, fats and vitamin content, although the government has stressed the levy applies only to added sugars, not naturally occurring lactose. Companies producing iced coffees, flavoured milkshakes and sweetened plant milks are expected to be most affected.
A Fiscal Signal Before Budget Day
The announcement landed ahead of a budget that is likely to feature selective tax rises and restrained spending. The Treasury appears eager to demonstrate “responsible stewardship,” and markets reacted with cautious optimism, with sterling and UK equities seeing modest uplift throughout the day.
What Will Be Taxed
- Milkshakes and flavoured milk drinks with added sugar
- Sweetened plant-based drinks (soy, oat, coconut, almond, etc.)
- Pre-mixed iced coffees and frappés with added sugars
- Retail and takeaway sweetened milk-based beverages
Products that will remain exempt include natural milk, unsweetened plant milks, infant formula, and medical-grade nutritional supplements.
What Comes Next
Parliament is expected to debate the expansion in 2026. While industry pressure may intensify, analysts say the political appetite for reversing sugar-related regulation is weak. If anything, the SDIL may expand further in coming years as the government confronts long-term NHS cost pressures and stagnating productivity linked to health outcomes.
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25 November 2025 – Fidelis News
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