The government is set to expand the tax on sugary drinks as part of an effort to combat obesity and safeguard the health of children. Health Secretary Wes Streeting is gearing up to reveal plans that would lower the threshold for the Soft Drinks Industry Levy from 5g to 4.5g of sugar per 100ml. This adjustment would result in a greater number of beverages being impacted unless manufacturers reduce the sugar content. Additionally, milkshakes and pre-packaged coffees will now be included under the levy, as the previous exemption for milk-based drinks is expected to be removed.
These changes are scheduled to take effect starting January 2028, prompting manufacturers to decrease the sugar levels in their drinks to avoid the additional charge. While the move is likely to face opposition from the soft drinks industry, it is projected to eliminate around 17 million calories from the daily intake of the population and alleviate the burden on the NHS by reducing obesity-related illnesses.
The sugary drinks tax, introduced by the Tories in April 2018 and paid by manufacturers, aims to address obesity by reducing sugar content in drinks that are popular among children. Beverages containing between 5p and 8g of sugar per 100 ml are taxed at 18p per liter, with the tax rising to 24p per liter for drinks with more than 8g of sugar per 100ml.
Initially, milk-based drinks were exempt due to concerns about calcium intake for children. However, the government has decided to review the levy extension earlier this year. A Whitehall source emphasized Health Secretary Wes Streeting’s commitment to ensuring the current generation of children is the healthiest ever, particularly focusing on improving the health of children from disadvantaged backgrounds.
These developments coincide with Rachel Reeves’ impending announcement of the Budget on Wednesday. Reeves is expected to outline strategies to address a deficit in public finances, with the Chancellor likely to introduce various smaller tax-raising measures after abandoning plans to increase income tax. The improved economic forecasts have enabled the government to avoid breaching its manifesto pledge to shield working individuals from tax hikes.
The public finance shortfall is estimated to be closer to £20 billion rather than the previously speculated £30-40 billion. Nevertheless, Reeves aims to create a buffer to withstand future economic challenges and prevent the need for additional financial measures next year.