Impact of extended sugar tax on milkshakes and coffees announced by government

The government has announced plans to expand the current sugar tax to include pre-packaged milkshakes and lattes, marking a significant shift in its strategy to tackle obesity and improve public health. The levy, which previously focused on high-sugar fizzy drinks, will now target hundreds of additional products, including popular brands and supermarket offerings. This decision also includes lowering the sugar content threshold at which the tax is applied from 5g per 100ml to 4g.

Since its introduction in 2016, the sugar tax has been credited with reducing the sugar content of soft drinks by more than 40 per cent. However, officials have argued that many manufacturers have reformulated drinks to just fall below the threshold, creating what they describe as a “target” of 5g per 100ml. By lowering this threshold, the government expects to capture an additional 866 products, including popular choices such as Sanpellegrino lemonade and certain versions of Lucozade and Fanta.

Pre-packaged coffee beverages, including flavoured lattes and frappuccinos, will also fall under the levy. For example, the sugar-filled supermarket version of a Starbucks caramel frappuccino, which contains 9.4g of sugar per 100ml, will incur the higher tax rate. Drinks made on-site in cafes and restaurants, however, will remain exempt from the charge.

The revised levy is expected to come into effect in April 2027. Products containing between 4g and 8g of sugar per 100ml will face a tax increase of 18p per litre, while those exceeding 8g will see a rise of 24p per litre. Despite initial concerns about the financial burden on businesses and consumers, the government estimates that this extension will bring long-term benefits. Studies suggest it could save the NHS and social care systems £200 million over 25 years, while reducing employee sick leave could boost the economy by £800 million.

Supporters of the measure, including the Obesity Health Alliance, have praised the initiative, highlighting its potential to reduce cases of childhood obesity and tooth decay. Government officials argue that the levy remains a critical part of fostering a healthier workforce and tackling the increasing costs of obesity-related healthcare. Conversely, critics, including the British Soft Drinks Association, have condemned the move, citing concerns about economic pressures on manufacturers and questioning the levy’s overall success in curbing obesity rates.

Industry representatives explain that reformulating products to meet the previous threshold required substantial investments, with the current adjustment risking further financial strain. The government has defended its position, stating that the sugar tax aligns with its broader goal of raising a healthier generation of children while supporting the NHS in becoming more sustainable in the face of rising health challenges.

A final decision on the proposed measures is expected later this year, with the changes potentially delivering billions of pounds of health and economic benefits over the next two decades.