The UK government is considering extending the soft drinks sugar tax to include dairy and dairy alternative-based drinks, according to proposals unveiled on Monday, 28 April. The current Soft Drinks Industry Levy (SDIL), introduced in 2018, exempts milk-based drinks to avoid discouraging calcium consumption, particularly among young children. However, the government now plans to remove this exemption under new proposals that could see an estimated 203 pre-packed milk-based drinks taxed unless manufacturers reformulate their recipes.

The extension of the tax would impact a significant portion of the category, with these drinks accounting for approximately 93% of sales. Products such as lattes and milkshakes are expected to fall under the expanded tax rules. Alongside this change, the government is also considering lowering the sugar threshold that triggers the levy from 5 grams to 4 grams of sugar per 100 millilitres.

The Treasury outlined the rationale for these changes in a statement, explaining that bringing milk-based and milk substitute drinks into the SDIL would create a financial incentive for manufacturers to reduce sugar content further. It also highlighted that only a small percentage—3.5%—of children's calcium intake comes from sugary milk-based drinks, suggesting that the health advantages of the exemption are limited in comparison to the harms caused by excessive sugar consumption.

A government consultation on these proposals is open until 21 July, inviting stakeholders and the public to provide feedback.

The Grocery Gazette is reporting that these measures are part of broader efforts to tackle sugar consumption and promote healthier diets in the UK. If adopted, the extended scope of the sugar tax would represent a significant policy shift with potential implications for the dairy drinks market and consumer choices.