Labour Expands ‘Sugar Tax’: Fizzy Drinks, Milkshakes and Flavoured Milk to Cost More
Lovers of fizzy drinks, milkshakes, and flavoured milk are set to face price hikes after Labour confirmed it is extending the UK’s Soft Drinks Industry Levy. Health Secretary Wes Streeting announced that exemptions for pre-packaged milk-based drinks will be removed, while the sugar threshold for the levy will be lowered from 5g per 100ml to 4.5g.
The move, described as part of a crackdown on childhood obesity, could also raise around £45 million a year for the Treasury. Streeting told MPs in the Commons:
“This government will not look away as children get unhealthier. Obesity robs children of the best possible start in life, hits the poorest hardest, sets them up for a lifetime of health problems, and costs the NHS billions.”
Under the changes, packaged milkshakes, flavoured milk, and milk substitute drinks with added sugar will now fall under the levy. Drinks made in cafes and restaurants are not affected. A “lactose allowance” will account for the natural sugars in milk, while beverages like oat milk with added sugar will be included.
Currently, companies pay a minimum of 18p per litre on soft drinks containing 5g or more sugar per 100ml. The new threshold of 4.5g per 100ml will bring more drinks into scope. However, the government decided against reducing the threshold to 4g after industry feedback warned of reformulation difficulties that could result in higher consumer prices.
The changes will undergo a technical consultation and are not expected to take effect until January 2028—nine months later than initially planned. Officials estimate that the measure will affect around 11% of soft drink sales, but only 35% of drinks are likely to see price increases, as others will reduce sugar content below the new threshold.
Introduced in 2018, the Soft Drinks Industry Levy was designed to encourage manufacturers to reduce sugar content or portion sizes in drinks. According to the Treasury, it has already led to a 46% average reduction in sugar in drinks covered by the levy between 2015 and 2020.
Industry bodies welcomed aspects of the announcement. Gavin Partington, head of the British Soft Drinks Association, said the decision to set the threshold at 4.5g rather than 4g was “technically reassuring” and acknowledged reformulation efforts over the past decade. Elise Seibold, COO of Suntory Beverage & Food GB&I, said the move allows companies to continue investing in sugar reduction and innovation.
The Food and Drink Federation also welcomed the decision, highlighting that the changes balance public health goals with the technical and financial challenges for manufacturers.
Health minister Karin Smyth emphasized that tackling obesity is a priority for the government, describing it as “the major challenge of our health service for this generation.” She noted that measures, including the sugar levy and restrictions on junk food advertising, aim to protect young people and improve long-term health outcomes.
