The UK Soft Drinks Industry Levy (SDIL) was introduced in 2018 and has generally been considered successful in its goals to reduce sugar intake from sugary drinks and encourage reformulation across the beverage industry.
But milk-based drinks have had an exemption from the outset (providing they contain at least 75ml milk per 100ml).
That means milkshakes and milky coffee drinks are typically exempt from the levy: despite the fact they can contain high levels of sugar.
Milk and plant-based alternatives
As the UK government announces a review of the SDIL, a key question it is asking is whether milk-based drinks should now be included.
Milk-based drinks were initially excluded from the levy so to not disincentivize calcium consumption, particularly among young people. In an effort to treat both animal milk and plant-based alternatives fairly, milk substitutes such as soya or almond milk are also exempt from the SDIL - providing they contain at least 120mg of calcium per 100ml.
But now the UK government is reviewing those exemptions.
“As young people only get 3.5% of their calcium intake from milk-based drinks, it is likely that the health benefits do not justify the harms from excess sugar,” notes the UK government.
“By bringing these drinks into the SDIL, the Government would introduce a tax incentive for manufacturers of these drinks to reduce sugar in their recipes.”
Officials will meet with a range of experts and interested parties across industry, academia and elsewhere before the review concludes in Spring 2025. If a decision to include milk-based drinks is made, that would be expected to come into effect 'following Budget 2025' (with the Budget released in the autumn, that would suggest any changes would be made in the new financial year in April 2026).
UK sugar tax
The UK Soft Drinks Industry Levy has two tiers, which are currently set as follows:
- Drinks with 5g sugar per 100ml or more pay a lower rate of 18p per liter
- Drinks with 8g sugar per 100ml or more pay a higher rate of 24p per liter
That's designed to encourage manufacturers to reformulate into the lower band; or to less than 5g sugar / 100ml to escape the levy entirely.
The UK government has announced the rates for each threshold will now be revised every year to keep up with inflation and maintain the impact of the policy.
But, alongside the potential inclusion of milk-based and milk-alternative drinks, it's also looking at whether the 5g threshold should be lowered, or whether a higher band to target the most sugary of drinks (ie 10g+) should be introduced.
The tax only applies to pre-packaged goods.
Dr Kawther Hashem, Head of Research and Impact at Action on Sugar, Queen Mary University of London, said: "We welcome the government's proposed review to expand the scope of the sugar tax to include milk-based and milk-alternative drinks.
"With many of these drinks containing high levels of sugar and calories, removing their current exemptions could create a much-needed shift toward healthier market options. These drinks can be reformulated, which makes this an even more promising step."
However, Dr Judith Bryans, Chief Executive of Dairy UK, says a move to include milk-based drinks in the SDIL could have 'unintended consequences for nutritional health'.
"Extending the levy to include all milk-based drinks, regardless of their milk content, would be counterproductive and could have unintended consequences for nutritional health," she said.
"It also ignores the presence of naturally occurring sugars like lactose, which contribute to overall sugar content but are not a public health concern.
"We will be working with the Treasury as part of their review and will continue to advocate that milk-based drinks with over 75% milk content remain excluded from any expansion of the levy – in light of the rich health and nutritional benefits they can deliver."