The government has broadened the scope of the Soft Drinks Industry Levy (SDIL). It will now apply not only to traditional sugary soft drinks, but also to pre-packaged milk-based or milk-alternative drinks that have added sugar, including supermarket milkshakes, flavoured milks, sweetened yoghurt drinks, chocolate milk drinks, and ready-to-drink coffees.
Specifically, the changes are as follows:-
- The sugar threshold triggering the levy is being lowered from 5 g per 100 ml to 4.5 g per 100 ml.
- The new regime comes into effect on 1st January 2028.
- Naturally unsweetened plant-based milks and plain animal milks remain exempt, but lactose-based sugars will be treated carefully: only lactose added or altered (e.g. hydrolysed lactose) will count towards the tax threshold.
The rationale, according to the government, is to tackle high sugar consumption, particularly among children, and encourage manufacturers to reformulate sugary drinks. Health groups have broadly welcomed the change.
Alongside the levy extension, the government has also unveiled a broader package of reforms under a revised approach to food regulation. The measures include:
- A strengthened registration and data-reporting system for food businesses;
- More effective enforcement powers at the local level;
- Improved consumer information, building on the existing food hygiene rating scheme.
The aim is to make oversight more systematic and efficient, especially for large suppliers that serve the majority of UK households, while reducing burdens on smaller compliant businesses.
In addition, as part of its 10-year health plan, the government intends to mandate that large food businesses report standardised metrics on the healthiness of sales of their product lines before the end of this Parliament. The idea is to increase transparency about how much these businesses sell “healthy” versus less healthy foods.
There is also a pledge to update existing legislation around school food standards - a move that is expected next year following consultation and is likely to affect what meals are provided in schools nationwide.
Why these changes matter
These new measures build on the government’s broader 2025 food strategy for England (and the UK more generally), which they hope will reshape the food system around health, sustainability, affordability, and equity.
- Public health and nutrition: Extending the sugar levy tackles a long-standing concern about high sugar consumption, especially among children. The Government hopes that it could help reduce obesity and dental health issues.
- Industry incentives and reformulation: Manufacturers and producers, especially large beverage companies and food retailers, will likely respond by reformulating products. Some may take on higher costs, but many may avoid the levy by lowering sugar content.
- Transparency and accountability: The requirement for large businesses to report on “healthy food” sales may increase pressure on retailers and manufacturers to offer more nutritious foods. The Government hopes that over time this could shift overall food supply.
- Regulation burdens and enforcement: Stricter registration, enforcement powers, and reporting requirements may place new administrative burdens on food businesses - especially bigger ones. Smaller, compliant businesses may benefit if regulation becomes more risk-based.
What remains unclear
- It’s not yet certain how many drinks will fall foul of the new sugar threshold. Much depends on how many drinks producers reformulate versus how many accept the levy.
- While the reforms aim to improve transparency and food quality, the effectiveness will depend heavily on how robustly reporting and enforcement are implemented.
- Some critics argue that a sugar levy alone cannot address deeper dietary and socio-economic factors behind poor nutrition or food insecurity.
- The long lead-time (the changes only take effect in 2028) might limit immediate impact, and there’s a risk of industry pushback or alternative workarounds.
While regulation is sometimes necessary, it must remain proportionate and sensitive to economic realities. Excessive or poorly-timed requirements can put pressure on smaller manufacturers and inevitably lead to increase costs being passed on to consumers - something any government must keep a close eye on.
The real test will lie in execution. If ministers ensure these measures remain proportionate, flexible, and economically-grounded, the package could deliver small health gains without tipping into overreach.
