What is sugar tax and how does it work?

29 April 2025, 12:57

Milkshakes and lattes could face the sugar tax but how much is it? And why does the UK have it? Here's everything we know.

Sugar tax which is currently applied to fizzy drinks across the UK but the latest news suggests this will now be extended to milkshakes and milk-based products we see cartoned up and sold in our local supermarkets.

Also known as the soft drinks industry levy (SDIL), the tax was announced in Britain in March 2016 with it officially being rolled out in April 2018 with the aim to get companies to reduce the amount of sugar in their products to help fight obesity in the country.

Now, seven years after the sugar tax was officially put into play, the government has confirmed they are looking at extending the levy to further high-sugar drinks. It was also confirmed they would reduce the level of sugar allowed per 100ml meaning even more products would face the tax.

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So what exactly is sugar tax and how does it work? And is the soft drinks industry levy working to helping? Here's what we know.

What is sugar tax in the UK?

This is a tax applied to manufacturers of drinks sold in the UK that contain 5g of sugar or more.

The tax idea was first rolled out when the UK introduced their anti-obesity policy and hailed this levy as one of their most important when targeting overweight children.

The idea of the tax was to encourage drink makers to reduce the sugar content in their products to help fight the health crisis facing young adults.

What products face the sugar tax?

At present, this tax is applied to mostly fizzy drinks but latest government talks suggest they will be extending it to cover milk-based products like milkshakes and lattes on shop shelves. It will also look at the dairy-free alternatives.

At the moment it excludes fruit and vegetable juices, alcohol-free beer and wine, cocktails, baby formula, diet replacement drinks and powdered drinks.

Drinks with at least 75% milk in and milk alternatives are currently exempt as they were believed to help children's low calcium levels at the time. However, experts suggest little of the mineral is consumed via these products and therefore it now faces the tax.

The sugar tax does not apply to high sugar foods like chocolate, cake and sweets.

How much is the sugar tax?

As it currently stands, the sugar tax charges are 24p a litre for a drink that contains 8g of sugar per 100ml or more or 18p a litre for a drink that contains between 5-8g of sugar per 100ml.

Recent government discussions suggest they will bring the level down to 4g of sugar per 100ml.

Has introducing the sugar tax worked?

Home Secretary Yvette Cooper said the government was considering taking the sugar tax further because it has shown it's had a particular impact on children's health and they believed further measures would be even more important.

To add to that, Public Health England reported there was a 28.8% reduction in sugar levels in every 100ml of fizzy drinks as manufacturers reduced their levels to comply with the tax.

Reports have suggested this has had a positive impact on children's obesity rates as well as their dental health.