The UK government is seeking public feedback on plans to extend the sugar tax on soft drinks to include milk-based beverages.
Introduced in 2018 as a measure to combat obesity, the Soft Drinks Industry Levy (SDIL) may now expand its criteria to cover drinks with lower sugar levels and those traditionally exempt, such as milk and plant-based milk alternatives.
The consultation aims to build on the SDIL’s effectiveness in motivating soft drink manufacturers to reduce sugar content, as emphasized in a joint statement by HM Revenue & Customs and HM Treasury.
Proposed changes include lowering the sugar threshold for the SDIL to apply from a range of 5-7.9g per 100ml to 4g-7.9g, thus adjusting the minimum levy to 18 pence (24 cents) per litre. Additionally, the exemption for milk-based drinks will be removed, with a ‘lactose allowance’ introduced to avoid penalizing natural milk sugars. Milk substitutes containing added sugars beyond their main ingredients, such as oats or rice, will also be required to pay the tax.
Currently, beverages with 8g or more sugar per 100ml are taxed at the higher rate of 24 pence per litre.
In response, the Food and Drink Federation stated, “Food and drink manufacturers are facing a series of inflationary pressures, and the government must create favorable conditions for business innovation. A predictable regulatory environment is essential for our sector to continue investing in healthier products.”
Manufacturers have already made significant strides in reducing sugar in beverages over the past five years, particularly in milk-based options that currently fall outside the SDIL, according to the spokesperson.
Conversely, the British Soft Drinks Association criticized the proposed changes as unnecessary. “This decision represents a muddled and damaging shift that risks undermining years of reformulation investment with questionable health benefits. Over 70% of soft drinks sold in the UK are low or no sugar, and nearly three-quarters of a billion kilograms of sugar have been eliminated from these beverages between 2015 and 2024,” said a spokesperson for the BSDA.
They further highlighted the unprecedented financial challenges faced by members, including record inflation, increased national insurance contributions, rising ingredient costs, and incoming trade tariffs. Increased costs have already hindered members’ growth and employment potential, leaving them concerned that lowering the SDIL threshold will complicate matters further.
On the other hand, Kawther Hashem from Action on Sugar praised the proposals for their potential to enhance public health. “We support the government’s steps to strengthen the SDIL, which has already led to significant sugar reductions in the beverage industry. These new proposals are crucial for achieving a consistent and fair approach across all drink types and are vital for public health,” Hashem stated.
The consultation period ends on July 21. Stakeholders can submit their responses online.
