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The UK government has today (25 November 2025) announced an extension of the soft drinks industry levy to include high-sugar milk-based drinks.

While the tax currently applies to traditional soft drinks such as fizzy drinks and fruit squash, the extension will mean pre-packaged milk-based and milk alternative drinks with added sugar are now covered. This includes flavoured milks and milkshakes, sweetened yogurt drinks and ready-to-drink coffees.

Many of these can contain as much added sugar as fizzy drinks, where much of that sugar is added separately to the milk, but were previously exempt from the levy. Plain and unsweetened milk and milk alternatives will not be included, the government confirmed.

The levy has seen the average sugar content of drinks in scope fall almost 50% since its introduction in 2018. It is a levy on manufacturers and importers, which has resulted in companies halving sugar content in popular drinks to avoid the tax.

The government expects to see further reductions in response to this new extension, which will see the threshold lowered from 5g to 4.5g per 100ml. This means more high-sugar drinks will fall under the levy unless manufacturers cut sugar content. They will be given until 1 January 2028 to reduce sugar in their drinks.

Extending the sugar levy is part of a package of measures taken by the government with the aim of tackling obesity and preventing heart disease, stroke and cancer. Other measures include banning ‘junk food’ adverts before the 9pm watershed, and banning the sale of high-caffeine energy drinks to children under 16.

The government expects the new plans to reduce daily calorie intake by around 4 million in children and 13 million in adults across England. It is also projected to deliver almost £1 billion in health and economic benefits, including saving the NHS £36 million.

Health and Social Care Secretary, Wes Streeting, said that children from low-income households are held back by an unhealthy start to life, adding that the existing levy has shown children’s health improves when industry cuts sugar levels.

“A healthier nation will mean less pressure on our NHS, a healthier economy and a happier society,” he continued.

Responding to the news, a spokesperson for the Food and Drink Federation welcomed the changes to the tax. They commented: “The new proposals take into account the costly and technically complex work that companies have to do to bring healthier products to market, and go some way to protecting the investment companies are making to help people follow healthier diets.”

“Drinks manufacturers will continue conversations with government to ensure we have the right conditions to keep investing in healthier product innovation in the UK, even while the rate of food inflation continues to run so high. Government support and partnership to ensure industry has the R&D investment it needs for healthier product development would help food and drink companies move further and faster.”

Meanwhile, James Watson, UK partner at global operations strategy and transformation consultancy Argon & Co, said that the move “highlights the absence of a coherent food and health strategy”.

He commented: “Manufacturers are being penalised without any roadmap of what ‘good’ looks like, nor where funds raised will be directed.”

“Even minor tweaks force manufacturers into costly reformulation, relabelling and compliance changes. Milkshakes represent a tiny fraction of total sugar consumption. If the aim is healthier diets, this feels like fettling rather than grasping the nettle – another missed opportunity to give clarity on a long-term nutrition and reformulation strategy with one-off tweaks that send mixed signals.”