The UK government has announced a significant expansion of its “sugar tax” (the Soft Drinks Industry Levy, or SDIL), confirming that bottled milkshakes, flavoured milks, pre-packaged lattes, and even certain milk-substitute drinks will now fall under the levy. The move, part of a broader effort to tackle obesity, ends a longstanding exemption for milk-based drinks.
Health Secretary Wes Streeting told MPs in the House of Commons that the government could no longer ignore mounting health concerns among children, especially given the sugar content in many of these dairy-based beverages. He made it clear that the government “will not look away as children get unhealthier” and moved to remove the tax exemption for milk-based drinks.
Under the new plans, the threshold for sugar at which a drink becomes liable for the levy will be lowered from 5 grams per 100 ml to 4.5 grams per 100 ml. The exemption for milk-based drinks is being removed, but to accommodate naturally occurring sugar in milk, a “lactose allowance” will be built into the regulation.
However, not all milky drinks will be taxed. The levy will not apply to milk-based beverages made and served in cafés, restaurants, or bars — which means “open-cup” lattes and milkshakes sold on the high street are excluded.
The revised legislation is not slated to take effect immediately. The government plans to publish a technical consultation on the draft law next year, with the expanded levy coming into force on 1 January 2028.
When first introduced in 2016 by then-Chancellor George Osborne, the SDIL targeted sugary fizzy drinks to curb childhood obesity and incentivise manufacturers to reduce sugar levels. Since then, the government says, the levy has driven a 46 percent reduction in the sugar contained in affected soft drinks, and nearly 90 percent of eligible drinks now contain less sugar than the tax threshold.
Under the current structure, drinks with between 5 g and 8 g of sugar per 100 ml are taxed at 18p per litre, while those with more than 8 g per 100 ml incur a charge of 24p per litre.
The government has given manufacturers two clear options. They can either reformulate their products to bring sugar content below the new threshold, or accept paying the tax.
By extending the sugar levy to include milk-based and milk-alternative drinks, policymakers hope to close what they describe as a “policy loophole” that allows high-sugar milk-based beverages to escape taxation simply because of their calcium content.
Critics and public health advocates have long argued that despite being exempt, many milk-based drinks contain as much—or, in some cases, more—sugar than taxed soft drinks. Earlier in the year, a government consultation revealed that more than 200 pre-packed milk-based drinks sold in the UK could be hit by the sugar tax unless their recipes change.
Supporters of the tax argue that expanding the SDIL to cover these drinks will encourage manufacturers to further reformulate, reduce sugar intake among children, and shift the market toward healthier alternatives. However, opponents warn of higher costs for consumers and question whether the tax will have the intended health impacts.
In making its case, the government is leaning on the success of the current levy: various studies indicate that the sugar tax has contributed to reduced sugar consumption among children, and some researchers credit the policy with preventing thousands of childhood obesity cases each year.
Overall, this policy marks a substantial tightening of the UK’s approach to sugar-sweetened beverages, reflecting growing political will to address longstanding public health challenges associated with high sugar consumption.
