UK Sugar Levy Will Cover Milkshakes and Plant Milks From 2028

The UK Soft Drinks Industry Levy will cover milk-based drinks and plant milks with added sugar from January 1, 2028, under changes set out in a policy paper published on July 13, 2026, alongside a technical consultation on the draft legislation. The policy drops the minimum taxable sugar threshold from 5.0 g down to 4.5 g per 100 ml.

Key takeaways

• Effective January 1, 2028, the UK Soft Drinks Industry Levy will remove the exemption for milk-based drinks and include sweetened plant-based milk alternatives.
• The lower taxation threshold drops from 5 g to 4.5 g of sugar per 100 ml, establishing new taxation tiers at 4.5 g to 7.9 g and 8 g or more per 100 ml.
• Naturally occurring lactose remains exempt from the tax calculation, but added lactose, hydrolysed lactose, and lactose derived from whey powder will count.
• Plant-based milk alternatives remain exempt only if all sugars originate naturally from a single plant ingredient, driving expected reformulation toward non-nutritive sweeteners.

What happened

On July 13, 2026, the UK government published a policy paper on the changes to the Soft Drinks Industry Levy and opened a technical consultation on the draft legislation, which closed on September 6, 2026. The policy itself was consulted on in 2025 (April 28 to July 21), with a summary of responses published at the Autumn Budget 2025. The changes are to be included in the Finance Bill 2026, enacted in the Finance Act 2027, and take effect on January 1, 2028.

It is the first time milk-based drinks and sweetened plant milks will fall under the levy, which until now has applied mainly to soft drinks. Producers have until 2028 to reformulate or prepare to pay.

The government frames the change as protecting children's health by extending the levy to sugary drinks it previously left out.

Detailed rules are available in the Changes to the Soft Drinks Industry Levy policy paper.

What changed in the sugar thresholds and dairy rules?

Under the original regulations, packaged beverages consisting of at least 75 milliliters of milk per 100 milliliters were completely exempt from the levy, regardless of their added sugar content. Under the new policy paper published on gov.uk, that broad exemption is formally revoked.

In addition to removing the dairy carve-out, the government is adjusting the baseline tax brackets as outlined in the Soft Drinks Industry Levy Changes documentation. The lower threshold will drop from 5.0 grams of sugar per 100 milliliters down to 4.5 grams per 100 milliliters. This adjustment creates two operative tiers:

• Lower band: 4.5 grams to 7.9 grams of taxable sugar per 100 milliliters.
• Higher band: 8.0 grams or more of taxable sugar per 100 milliliters.

The calculation of taxable sugar for milk drinks introduces specific rules around milk sugars. Naturally present lactose within dairy fluids will not count toward the taxable sugar total. However, the government policy paper makes clear that any lactose added as an ingredient, lactose introduced via whey powder, or hydrolysed lactose will be treated as added sugar and will count toward the levy bands.

Plant-based milk substitutes, such as oat, almond, soy and pea drinks, come into scope if they have added sugar and contain 4.5 g or more of total sugars per 100 ml. Drinks whose sugars are released only from their principal ingredient, such as the oats in an oat drink, are excluded.

Who is affected across retail and dairy brands?

The expanded scope impacts a wide variety of refrigerated and shelf-stable packaged drinks sold across retail stores, gyms, and quick-service venues in the United Kingdom. Pre-packaged chocolate milk, strawberry milkshakes, ready-to-drink iced coffees, and high-sugar dessert beverages will fall directly under the revised rules unless manufacturers adjust their recipes.

Plant milk producers are also significantly affected. While unsweetened soy milk or pure oat milk with no added sugar remains exempt if sugars come only from that single crop, sweetened barista blends, vanilla-flavored milks and plant shakes with added sugar will be in scope if they reach 4.5 g of total sugar per 100 ml.

Protein shakes and meal-replacement beverages sold in ready-to-drink bottles also require close inspection. Many fitness consumers already compare ready-to-drink options against dry powders, as seen in guides like our RYSE Loaded Protein vs Core Power: Powder vs Shake, Label by Label analysis. Milk-based ready-to-drink shakes sold in the UK will need to be checked against the new bands.

For readers in the United States, these changes do not alter American federal policy. The US has no federal soda or beverage tax, though selective municipal beverage taxes exist across certain individual cities, similar to state-level dialogues discussed in our report on SNAP Soda Bans: 18 States Open for Comment After a 12% Sales Drop.

For another rule change this month, see the FDA 2026 Food Code and Sesame: Allergen Disclosure Moves to Menus.

What it means for shoppers at the supermarket shelf?

For UK consumers, the most immediate consequence on packaging will involve the mandatory nutrition table on the back or side of cartons and bottles. UK nutrition labeling requires brands to display carbohydrates and total sugars per 100 ml, alongside per-serving numbers.

Understanding this distinction requires knowing how regulators separate total sugars from free sugars:

• Total sugars: The overall sugar figure shown on the UK nutrition declaration, combining naturally occurring sugars (such as intrinsic lactose in milk) and added sugars.
• Free sugars: Any monosaccharides and disaccharides added to foods by manufacturers or cooks, plus sugars naturally present in honey, syrups, and fruit juices. Regulators target free sugars because they contribute to excess caloric intake and dental decay.

Because the levy exempts intrinsic lactose but taxes other added sugars, shoppers may see significant recipe overhauls. When the original soft drink levy took effect, brands turned heavily toward high-intensity sweeteners to stay below the tax threshold. Shoppers should expect to see ingredients such as sucralose, acesulfame K, and steviol glycosides appearing in milkshakes and flavored plant milks that previously relied strictly on sugar.

To identify these changes, check both the "of which sugars" line under carbohydrates and the text of the ingredients list. Functional additives like stabilizing agents and thickeners often accompany low-calorie sweeteners to preserve texture, a topic explored further in our guide on Emulsifiers on Ingredient Lists Explained: Lecithin to Polysorbate 80.

The background

The UK Soft Drinks Industry Levy was first announced in 2016 and formally took effect in April 2018. The original levy prompted many soft drink makers to cut sugar below the 5 g per 100 ml threshold.

At the time of its initial rollout, the UK government exempted milk-based drinks containing at least 75% milk to avoid penalizing calcium-rich staples consumed by growing children. Milk-based drinks, including many milkshakes and bottled coffees, therefore stayed outside the levy regardless of their added sugar.

The government set out its reasons in its announcement that the soft drink levy extended to protect children and improve health. The July 13, 2026 policy paper describes how those changes will work in practice.

What to watch next

With the public technical consultation closed as of September 6, 2026, the next step is the legislation itself: the Finance Bill 2026 and Finance Act 2027, followed by updated HMRC guidance ahead of January 1, 2028.

Between now and 2028, producers will decide whether to pay the levy, pass it on, or cut sugar, possibly with sweeteners such as sucralose and acesulfame K, which the levy does not tax.

Nobody can yet say whether extending the levy to milk and plant drinks will reduce sugar intake as much as the original levy did for soft drinks. As manufacturers adjust formulations, reviewing real-time ingredient listings remains essential.