The UK government has announced plans to extend the sugar tax, officially known as the Soft Drinks Industry Levy (SDIL), to cover bottled milkshakes and pre-packaged lattes from January 2028. The current exemption for milk-based drinks with added sugar will be removed, though a 'lactose allowance' will account for naturally occurring sugars in milk. Additionally, the lower threshold for the tax will be reduced from 5g to 4.5g of total sugars per 100ml.
The SDIL, introduced by the Conservative government in 2016, targets pre-packaged drinks sold in cans and cartons to combat obesity, particularly among children. The changes aim to further reduce sugar consumption by including drinks more likely to be consumed by children, such as milkshakes and coffee drinks. Milk substitute drinks without added sugar will remain exempt.
Mark Jones, a food and drink expert at law firm Gordons, welcomed the move, noting that 28% of children are overweight and 41% of 10–11-year-olds are overweight. He cited expert reviews and the National Food Strategy, which recommend stronger measures on sugar to improve diets and reduce NHS costs from diet-related diseases.
However, the Institute of Chartered Accountants in England and Wales (ICAEW) expressed concerns. Ed Saltmarsh, ICAEW technical manager, said the extension introduces unnecessary complexity and may yield limited public health gains. He argued that lowering the threshold to 4.5g targets only 11% of the market, and many affected drinks will simply remove small amounts of sugar to remain exempt. He also questioned why high-sugar categories like pure fruit juices and smoothies remain exempt.
Meanwhile, markets rallied ahead of the budget, with the FTSE 100 closing up 0.78% at 9,609 points. UK bond yields fell, with 10-year yields dropping to 4.495%. Chancellor Rachel Reeves is expected to reveal reduced growth forecasts for the next five years in the upcoming budget.
