The government has confirmed a significant expansion of the sugar tax that will see milkshakes and pre-packaged lattes lose their exemption status. Health Secretary Wes Streeting announced the controversial move to MPs, declaring the government "will not look away as children get unhealthier."
What's Changing in the Sugar Tax?
The soft drinks industry levy, commonly known as the sugar tax, is undergoing its most substantial changes since introduction. The threshold for taxation is being lowered from 5g of sugar per 100ml to 4.5g per 100ml, capturing more sugary drinks within its scope.
More significantly, the exemption for milk-based drinks will be completely removed. "We're expanding the soft drinks industry levy to include bottles and cartons of milkshakes, flavoured milk and milk substitute drinks," Streeting told the Commons on Tuesday.
The changes won't take effect immediately. A technical consultation on draft legislation will be published next year, with the new rules scheduled to come into force on 1 January 2028.
Why Target Milk-Based Drinks?
Milk-based beverages previously enjoyed exemption because they contain calcium, which is encouraged in children's diets. However, health officials have become increasingly concerned about the high sugar content in many of these products.
The government has attempted to address this concern by introducing a new "lactose allowance" that will take into account naturally occurring sugars in milk, while still targeting added sugars that contribute to obesity.
It's important to note that the tax will not apply to drinks made and served in cafes, restaurants and bars. This means your barista-made latte from high street coffee shops remains unaffected.
Impact and Industry Response
The original sugar tax, introduced by George Osborne in 2016, has been remarkably successful in encouraging manufacturers to reformulate their products. Government statistics show a 46% reduction in sugar content within affected soft drinks, with nearly 90% of drinks now containing less sugar than the taxation threshold.
Currently, the levy charges manufacturers 18p per litre for drinks containing 5g-8g of sugar per 100ml, and 24p per litre for those with 8g or more. Companies typically face the choice of reformulating their recipes or passing the cost to consumers.
The government had originally considered an even stricter threshold of 4g per 100ml during consultation, which could have affected major brands like Pepsi that currently sit at the 4.5g mark.
