Michelle ThompsonUnder proposed plans open for consultation, both dairy-based beverages and non-dairy alternatives might be subject to the same tax as soft drinks.
The government is considering extending the sugar tax currently applied to fizzy drinks to include milkshakes and similar products. A consultation was launched on Monday to explore ending the current tax exemption for both dairy-based drinks and plant-based alternatives like oat or rice beverages.
Chancellor Rachel Reeves had already indicated in last year’s budget that expanding the tax was under review. The Treasury confirmed it now plans to proceed, also proposing a stricter sugar threshold—lowering the limit from 5g to 4g per 100ml before the tax kicks in.
Following the original introduction of the Soft Drinks Industry Levy (SDIL) in 2018 by the Conservative government, manufacturers reformulated products, resulting in 89% of fizzy drinks sold in the UK now avoiding the tax. However, government figures suggest about 203 milk-based pre-packed drinks—making up 93% of sales in that category—would be taxed unless sugar levels are reduced under the new rules.
The initial exemption for dairy drinks aimed to support calcium intake among children, but Treasury data now shows these drinks contribute only 3.5% to young people’s calcium consumption. As such, the government argues the sugar-related health risks outweigh the nutritional benefits.
Bringing these drinks under the SDIL would encourage companies to further cut sugar content, the Treasury stated.
However, the Institute of Economic Affairs criticized the move, calling the sugar tax ineffective and costly for consumers. Christopher Snowdon, its head of lifestyle economics, argued that sugar taxes have failed globally and questioned the policy’s alignment with political promises not to increase taxes on working families.
The consultation is open until 21 July.
