The government has launched a consultation on plans to significantly strengthen the Soft Drinks Industry Levy (SDIL), proposing to lower the sugar threshold and remove exemptions for milk-based drinks.
HM Revenue & Customs and Treasury are seeking industry views on three key proposals to expand the scope of the sugar tax, which was first introduced in 2018. The consultation, launched yesterday, will run until 21 July 2025.
Under the proposals, the minimum sugar content at which the levy applies would be reduced from 5g to 4g per 100ml, while exemptions for milk-based drinks and certain milk substitute products would be removed.
In their joint foreword to the consultation document, James Murray, exchequer secretary to the treasury, and Ashley Dalton, public health and prevention minister, defended the proposed changes, citing the continued high rates of obesity in the UK.
“Our nation faces the formidable challenge of persistently high rates of obesity and overweight, affecting nearly two-thirds of adults and a third of children. This epidemic costs the health service an estimated £19 billion a year and the economy an estimated £15 billion annually,” they wrote.
The ministers pointed to the SDIL's track record, stating: “With the right incentives, the industry has successfully removed nearly half (46%) of the sugar from the drinks in scope of the levy.”
However, they also noted that “many products have been reformulated to just below the 5g sugar per 100ml threshold” and that “nearly a decade on, we believe it is time to set a more ambitious target.”
The consultation follows an announcement at the Autumn Budget 2024 that the government would review the SDIL to identify opportunities to improve its effectiveness. The proposals are:
- To reduce the minimum sugar content threshold from 5g to 4g per 100ml
- To remove the exemption for milk-based drinks whilst introducing a 'lactose allowance' to account for natural sugars in milk
- To remove the exemption for milk substitute drinks with added sugars beyond those derived from the principal ingredient
The Food Foundation, a food policy think tank, welcomed the consultation. Dr Hannah Brinsden, head of policy and advocacy, said: “We welcome the government consultation on the Soft Drinks Industry Levy - SDIL has been a major public health success, removing tonnes of sugar from soft drinks and in turn our diets, while also raising money for children's health. It's only right that we keep ensuring it is working as well as possible; removing exemptions on milk-based drinks and changing the sugar thresholds where the tax is paid are two important improvements.”
Dr Brinsden went further, suggesting the government should consider expanding the levy beyond beverages.
“Sugar in our diets comes from a range of food, not just soft drinks. If the government is serious about improving diets, our health and the economy, they're going to need to be more ambitious and consider extending SDIL to food as the next step,” Dr Brinsden said.
Taking a diametrically opposite view, the Institute of Economic Affairs (IEA), a free-market think tank, called for the levy to be scrapped entirely.
“The sugar tax has been such a dramatic failure that it should be repealed, not expanded,” Dr Christopher Snowdon, Head of Lifestyle Economics at the IEA, said.
“It has been costing consumers £300 million a year while childhood obesity rates have continued to rise. To claim it has been a success on the basis of a hypothetical reduction of one calorie a day is absurd. Sugar taxes have never worked anywhere. What happened to Starmer's promise to not raise taxes on working people?”
The government says it expects to confirm the final policy at Autumn Budget 2025.
