The UK Government has confirmed that the Soft Drinks Industry Levy (SDIL) will be extended by lowering the sugar threshold to cover more products, and by bringing sugary milk-based drinks and added sugar milk alternatives within the scope of the tax.
Soft drinks with 5-7.9g of sugar per 100ml are currently taxed 19.4p per litre, but the threshold is set to be lowered to 4.5g of sugar per 100ml, effective from 1 January 2028.
The government said it considered that lowering the threshold from 5g to 4.5g total sugar per 100ml, rather than 4g as proposed in its April consultation, struck the appropriate balance between supporting health objectives and fostering conditions that allowed the soft drink industry to continue to grow and invest.
Pre-packed milk-based drinks with added sugar, such as flavoured milks, sweetened yoghurt drinks, chocolate milk drinks, and ready-to-drink coffees, will now come under the scope of the SDIL, but the government will introduce a ‘lactose allowance’ to account for the naturally occurring sugars in milk.
Milk substitutes with added sugar, including the flavoured varieties that could be consumed as alternatives to flavoured milk-based drinks, will also be included within the SDIL scope.
Plain animal milks and milk substitute drinks without added sugar will not be included within the scope.
The government had previously proposed an implementation date of 1 April 2027, but has extended this by nine months, after acknowledging that the soft drinks industry will be working to deliver the new Deposit Return Scheme up to and within 2027. The new implementation date of 1 January 2028 allows over two years for reformulation.
Following their introduction, the changes to SDIL are expected to raise £40-£45m a year in additional tax receipts.
The changes could also cut 17 million calories a day from the nation’s daily intake and the new charge will add £1bn in health and economic benefits, claimed the government.
Health and Social Care Secretary Wes Streeting said:
“An unhealthy start to life holds kids back from day one, especially those from poor backgrounds like mine. We’re on a mission to raise the healthiest generation of children ever, and that means taking on the biggest drivers of poor health.
“The levy has already shown that when industry cuts sugar levels, children’s health improves. So, we’re going further .
“A healthier nation will mean less pressure on our NHS, a healthier economy, and a happier society. It’s a simple change that is part of this government’s mission to give every child a healthy start to life.”
Since it was introduced, the levy has already led to suppliers halving sugar content in popular drinks to avoid the tax. The government expects companies to do the same with the extension.
The British Soft Drinks Association said:
“While this move will create an additional cost burden for industry, including our SME members, we take comfort from the fact that a Government which describes itself as pro-growth has elected not to pursue its original goal of lowering the threshold to 4g per 100ml, which would have been technically challenging for industry. We are also reassured that the Government has committed to making no further changes to the Levy this parliamentary term, as well as deciding against an implementation date of 2027, which would have been damaging for our sector at a time when we are helping to set up a world-leading deposit return scheme to go live in 2027.
“We welcome the Government’s proactive engagement with Industry on this issue. As well as protecting jobs and investment in our industry, the move to 4.5g acknowledges the widespread reformulation work undertaken by soft drinks manufacturers over the last decade. Since 2015, sugar consumption from soft drinks is down 43%, and today just 6% of take-home sugar in diets in Great Britain comes from soft drinks.”
