Summary
The Soft Drinks Industry Levy (SDIL) is a UK government tax introduced in April 2018 aimed at reducing sugar consumption by targeting manufacturers and importers of sugar-sweetened beverages (SSBs). Initially, the levy applied to carbonated and other soft drinks exceeding specified sugar thresholds but exempted certain categories, notably sweetened milk-based drinks such as flavored milks, milkshakes, and ready-to-drink coffees, despite their often high sugar content. This exemption prompted criticism from public health advocates and policymakers concerned about inconsistencies undermining the levy’s public health objectives.
In response to mounting evidence about the contribution of sweetened milk beverages to sugar intake and related health risks, the UK government announced plans to extend the SDIL’s scope from November 2025 to include pre-packaged milk-based and milk-alternative drinks with added sugar. This policy shift reflects efforts to create a more equitable regulatory framework, incentivize reformulation across all sugary drinks, and further reduce sugar consumption to combat childhood obesity and chronic disease. The updated levy lowers the sugar threshold for taxation, increasing the range of products subject to the charge while maintaining exemptions for plain, unsweetened milk and milk substitutes.
The levy’s implementation and expansion have generated significant industry response and controversy. Food and beverage manufacturers have engaged in product reformulation to reduce sugar levels, often substituting sugar with artificial sweeteners, while also highlighting the technical and financial challenges of compliance. Industry lobbying played a notable role in shaping initial exclusions and continues to influence policy discussions, raising questions about transparency and regulatory fairness. Additionally, some stakeholders have expressed concerns about consumer confusion stemming from varied reformulation strategies and the complexity of defining what constitutes a ‘soft drink’ for levy purposes.
Despite these challenges, evidence indicates that the SDIL has contributed to reductions in sugar content across the UK soft drinks market and increased public awareness of the health risks associated with high sugar intake. International comparisons underscore the UK’s evolving approach to sugar taxation, with the recent inclusion of sweetened milk beverages addressing earlier policy gaps found in other jurisdictions. As the government finalizes the expanded levy framework, continued collaboration among policymakers, health experts, and industry stakeholders will be essential to maximize public health benefits and ensure effective implementation.
Background
Sugar-sweetened beverages (SSBs) are defined by the World Health Organization (WHO) as all beverages containing free sugars, including carbonated and non-carbonated soft drinks, 100% fruit or vegetable juices and drinks, liquid and powder concentrates, flavored water, energy and sports drinks, ready-to-drink tea and coffee, and flavored milk drinks. Notably, plant-based milk substitutes are excluded from this definition despite sometimes containing considerable amounts of free sugars.
In the United Kingdom, the Soft Drinks Industry Levy (SDIL) was announced in March 2016 and implemented in April 2018 as a tiered tax on manufacturers and importers of sugar-sweetened beverages. The levy charges £0.24 per litre for drinks containing over 8 grams of sugar per 100 millilitres (high levy category), £0.18 per litre for drinks with 5 to 8 grams of sugar per 100 millilitres (low levy category), and no charge for drinks with less than 5 grams of sugar per 100 millilitres. Exemptions include fruit juices, milk-based drinks containing more than 75% milk, drinks with over 1.2% alcohol, powders, and manufacturers producing less than one million litres annually of non-exempt drinks. The aim of the SDIL has been to encourage manufacturers to reduce sugar content or portion sizes, thereby improving the healthiness of the soft drinks market.
Milk-based drinks with added sugar, such as sweetened chocolate milk, can contain extremely high levels of sugar, raising concerns about their exemption from the levy. Some stakeholders have argued that removing the exemption for these milk-based drinks should be accompanied by clear guidelines defining what constitutes a ‘soft drink’ to avoid penalizing products based on format rather than nutritional content, which could undermine public health objectives and regulatory consistency.
Despite the levy, certain categories such as sports drinks (e.g., Powerade®) remain an exception, often cited as the “exception that proves the rule” in studies analyzing the SDIL’s impact. Comprehensive data from the Department of Health and Social Care indicates a 13.5% rise in volume sales of reformulated, healthier beverages between 2015 and 2024, demonstrating consumer acceptance and commercial viability of these products. Health Secretary Wes Streeting emphasized the importance of addressing the biggest drivers of poor health early in life to raise the healthiest generation of children, noting that the levy has contributed to improvements in children’s health by incentivizing sugar reduction in the industry.
Legislative History and Policy Development
The Soft Drinks Industry Levy (SDIL) was first announced in the 2016 Budget by then Chancellor George Osborne as a measure targeting manufacturers and importers of sugar-added soft drinks, with implementation beginning in April 2018. Initially, the levy applied to beverages containing added sugar above a threshold of 5 grams per 100 milliliters, primarily targeting carbonated drinks and similar sugary beverages. Wales demonstrated early leadership by voting in favor of a 20% sugar tax on sugary drinks in 2017, preceding the UK-wide introduction of the SDIL and highlighting regional variations in fiscal approaches to sugar consumption.
Following the levy’s introduction, health advocacy groups across the UK called for an expansion of the SDIL’s scope to include categories of drinks that were originally exempt, such as juices without added sugar and notably sweetened milk-based beverages. This exclusion was influenced in part by lobbying efforts from the food and drink industry, which successfully argued against the inclusion of milk-based sugar-sweetened beverages (SSBs) in the original policy framework. Industry stakeholders expressed satisfaction with government responsiveness to their concerns, with the Food and Drink Federation stating that the government’s revisions reflected the complex and costly process companies face when reformulating products to reduce sugar content.
In response to ongoing consultations and growing evidence of the sugar content in exempt products, the UK government announced that from November 2025 the SDIL would be extended to cover pre-packaged milk-based and milk-alternative drinks with added sugar. This includes supermarket milkshakes, flavoured milks, sweetened yoghurt drinks, chocolate milk drinks, and ready-to-drink coffees, all of which were previously exempt despite often containing comparable levels of added sugar to fizzy drinks. The government conducted consultations to propose adjustments to the minimum sugar content threshold and to reconsider exemptions, seeking feedback from stakeholders to finalize the policy by the Autumn Budget 2025.
The implementation experience has highlighted challenges in monitoring and evaluating the SDIL effectively, suggesting future policies should engage more thoroughly with the wider food and beverage sector early in the process. Clear communication and technical guidance are necessary to prevent misinterpretations and to facilitate timely compliance responses. Additionally, further research into the policy process, particularly the role and influence of the food and drink industry in shaping levy specifics, has been identified as an important avenue for understanding and improving such fiscal health interventions.
Regulatory Framework and Criteria
The UK Soft Drinks Industry Levy (SDIL), introduced in 2018, initially exempted milk-based drinks, including flavored milks, milkshakes, sweetened yoghurt drinks, chocolate milk, and ready-to-drink (RTD) coffees, despite many containing added sugars comparable to sugary soft drinks. Recent policy changes have expanded the levy’s scope to include these pre-packaged milk-based and milk-alternative drinks with added sugar, reflecting concerns over their sugar content and contribution to free sugar intake.
Under the updated regulatory framework, the sugar threshold for levy applicability has been lowered from 5g to 4.5g per 100ml, thereby increasing the number of drinks liable to the charge unless manufacturers reformulate to reduce sugar levels by January 2028. Plain, unsweetened milk and milk-alternative drinks remain exempt from the levy.
In terms of sugar measurement, total sugars—comprising naturally occurring sugars released during manufacturing plus any added sugars—are used to determine eligibility for the levy in milk-substitute drinks. However, sugars derived from the principal or ‘core’ ingredient, such as naturally present sugars in oats for oat milk or lactose in dairy milk, are generally excluded from the definition of added sugars for levy purposes. This approach aligns with the Scientific Advisory Committee on Nutrition’s (SACN) definition of free sugars, which excludes intrinsic lactose found in milk and dairy products from dietary free sugar calculations.
The regulatory distinction between milk-based and plant-based drinks has generated debate. Some stakeholders argue that excluding naturally occurring sugars in plant-based milks may confer an unfair advantage to dairy products, while the Plant-Based Food Alliance supports the continued exemption of unsweetened plant-based milk substitutes. Additionally, producers have expressed concern about the removal of exemptions creating regulatory inconsistencies, especially where yogurt-based drinks are classified as non-HFSS (High in Fat, Salt, and Sugar) under the Nutrient Profiling Model.
Certain product categories, such as dissolvable powders, were excluded from the SDIL scope following earlier consultations, with stakeholders advocating for more detailed analysis before any inclusion. The government has emphasized ongoing consultation and engagement with the food and beverage sector to clarify technical definitions and implementation processes, aiming to avoid ambiguity that requires industry interpretation.
Safety assessments and legislative limits govern the use of non-sugar sweeteners (NSS) in the UK, and SACN has recently published a position statement on NSS in relation to WHO guidelines, ensuring these additives are regulated within food and drink products.
Rationale for Inclusion of Sweetened Milk Beverages
The inclusion of sweetened milk beverages under the Soft Drinks Industry Levy (SDIL) aims to address several public health and policy concerns surrounding sugar consumption and regulatory fairness. Prior to the change, sweetened milk-based drinks were exempt from the levy, a decision criticized for undermining the initiative’s intent and creating inconsistencies in how sugary beverages were treated. The Public Health and Food Alliance (PBFA) highlighted that allowing a lactose exemption favored sweetened milk-based products over sweetened plant-based alternatives, thereby creating an uneven playing field and potentially confusing consumers about the true sugar content of these drinks.
From a health perspective, sugary milk drinks have been shown to contribute significantly to sugar intake among children, who often prefer sweetened beverages to plain milk, posing risks for obesity and other chronic conditions. Studies have found that higher consumption of sugar-sweetened beverages in pediatric populations correlates with increased risks of gallstone disease, hypertension, cardiovascular disease, and mortality. Conversely, adequate milk consumption is linked to better calcium intake, yet sweetened milk drinks, especially those with added sugars like chocolate milk, can contain extremely high sugar levels that negate nutritional benefits.
The government’s extension of the SDIL to cover sweetened milk drinks reflects a strategy to maintain a level playing field across all sweetened beverages and better support public health goals by reducing sugar consumption. This approach also aims to protect levy revenue by closing loopholes that previously exempted certain products. Although the consultation process did not explicitly solicit views on toddler or growing-up milks, multiple responses from public health bodies emphasized the importance of including milk-based drinks to avoid regulatory inconsistencies. Some stakeholders cautioned that classifying yogurt drinks or similar products purely by format rather than nutritional content could undermine health objectives, highlighting the complexity of defining what constitutes a ‘soft drink’ for taxation purposes.
Furthermore, the reformulation of soft drinks in response to the SDIL has led to increased use of artificial sweeteners, suggesting that extending the levy to sweetened milk beverages could encourage similar healthier reformulations in this product category. The government’s rationale also considers the broader impact on childhood health, as reducing sugar intake through these beverages aligns with the mission to give every child a healthier start in life, potentially easing future health system burdens and improving population well-being.
Lastly, industry influence has played a notable role in shaping the policy details, with lobbying efforts contributing to the prior exclusion of milk-based sugar-sweetened beverages. Future policy development may benefit from greater engagement with the food and beverage sector to clarify technical definitions and implementation guidelines, thereby enhancing regulatory transparency and effectiveness.
Implementation and Enforcement
The expansion of the Soft Drinks Industry Levy (SDIL) to include sweetened milk-based and milk substitute beverages involves multiple implementation and enforcement considerations. One of the primary challenges is integrating these new product categories into the existing SDIL taxation infrastructure, which requires extending compliance monitoring and enforcement mechanisms currently in place. This process also needs to address potential legal challenges from industry stakeholders regarding product definitions and the set sugar level thresholds, as well as secure legislative approval in line with government priorities.
A significant aspect of implementation is managing the timeline for beverage manufacturers to reformulate their products. Companies have until January 1, 2028, to reduce sugar content and comply with the new levy thresholds, reflecting an acknowledgment of the technical complexity and investment needed for reformulation. Industry feedback has welcomed the extended implementation period, which provides valuable time to adapt products and meet the increased sugar thresholds. Producers anticipate reformulation timelines of up to 36 months to align with these requirements.
The removal of existing exemptions for milk-based and milk substitute drinks, including milk-based fermented yoghurt drinks, represents a substantial policy shift. Current SDIL legislation previously excluded certain milk-based products, but the new measures will affect all such drinks formerly covered by these exemptions, consistent with the 2016 consultation decisions that had already excluded dissolvable powders.
In terms of policy engagement and enforcement, experience indicates that UK government policy frameworks are currently ill-suited for adequate monitoring and evaluation. Future policy design should involve more comprehensive engagement with the wider food and beverage sector to ensure clarity in technical requirements, reducing the need for industry interpretation and facilitating timely responses to implementation queries. Additionally, industry lobbying has influenced past exemption decisions, such as the exclusion of milk-based SSBs, suggesting that a more transparent policy process is needed to manage stakeholder influence.
Health professionals and academics strongly support removing exemptions for milk substitute drinks with added sugar, emphasizing the public health benefits of such measures. However, there is caution regarding the use of non-sugar sweeteners (NSS) as sugar replacements. The UK’s regulatory framework mandates rigorous safety assessments and limits on NSS usage, and an incremental reduction in sugar thresholds over a longer period may assist in smoother reformulation processes while maintaining safety standards.
Impact of the Levy
The introduction of the Soft Drinks Industry Levy (SDIL) has had a significant impact on the sugar content of soft drinks, including sweetened milk beverages, by encouraging manufacturers to reformulate their products. Several producers and retailers, such as Lucozade Ribena Suntory and Tesco, announced plans to reduce total sugar content in response to the levy, which took effect in April 2018. This reformulation led to a forecasted reduction in revenue from the levy, though the government confirmed that the Department for Education would still receive the full £1 billion funding originally planned.
One of the primary aims of the levy was to reduce childhood obesity by incentivizing manufacturers to lower sugar levels in their products, including those previously not covered, such as milk-based drinks now falling under the levy threshold. Retailers experienced challenges as customers expressed confusion regarding reformulated drinks that contained both sugar and sweeteners but were priced differently due to their sugar content falling just below the levy threshold. This confusion often resulted in customer queries directed at retailers rather than manufacturers.
Research indicates that the SDIL has contributed to substantial reformulation within the UK soft drinks market, with a notable increase in the use of artificial sweeteners as manufacturers sought to maintain product appeal while reducing sugar content. The levy’s effects on purchasing patterns were particularly pronounced among low-income households and families with children, groups that previously had higher pre-levy sugar purchases. This suggests that the SDIL may help reduce dietary inequalities and improve health outcomes within vulnerable populations.
Beyond reformulation and purchasing behavior changes, the levy has had an educational impact by raising public awareness about the health risks associated with high sugar consumption in beverages. Health experts emphasize reducing sugary drink intake to lower risks of obesity, hypertension, cardiovascular disease, and other chronic conditions. However, some caution remains regarding overreliance on non-sugar sweeteners (N
Industry Response
The introduction and subsequent changes to the Soft Drinks Industry Levy (SDIL) have elicited a mixed but largely strategic response from the food and beverage industry. Industry representatives, including a spokesperson for the Food and Drink Federation (FDF), expressed satisfaction that the government listened to industry concerns and adjusted the levy accordingly, particularly appreciating proposals that account for the complex and costly processes involved in reformulating products to be healthier. These adjustments are seen as a way to protect investments companies are making to support healthier diets while providing clearer, consistent benchmarks aligned with advertising and promotion rules, thereby simplifying compliance.
Despite this, the levy’s implementation was described by industry participants as technically complex, expensive, and time-consuming. The responses from companies varied depending on the level of leadership support, and the process required strategic portfolio reviews and selective product-level actions. While the SDIL was broadly accepted as an attempt to create a level playing field within the soft drinks sector, some industry voices criticized the exclusion of milk-based drinks from the initial levy as creating an uneven market. Retailers also reported customer confusion stemming from differences in product reformulation, such as sugary drinks reformulated to just below the levy threshold that still contained sugar alongside sweeteners, which led to consumer queries directed at retailers rather than manufacturers.
Key players in the industry, including Lucozade Ribena Suntory and Tesco, have already announced plans to reduce sugar content in their products in response to the levy, highlighting the reformulation momentum within the sector. The Chancellor of the Exchequer acknowledged that reformulation efforts have lowered forecasted revenue from the levy, yet assured that funding commitments, such as the £1 billion allocation to the Department for Education, remain intact.
A significant development was the proposal to exclude sugars derived from the principal or ‘core’ ingredient—particularly in milk substitute drinks—from the definition of ‘added sugars’ subject to the levy. This approach was widely accepted by trade bodies and producers as practical and appropriate, helping keep milk-based and milk substitute drinks without added sugar out of scope. However, industry respondents also noted challenges related to reformulating such drinks, including concerns about consumer acceptance of reformulated products.
Industry feedback has underscored the importance of clearer policy communication and engagement with the wider food and beverage sector to avoid the need for companies to interpret policy details themselves and to facilitate timely responses to implementation queries. Some respondents have called for further research into the policy process behind the SDIL, particularly regarding the influence of industry lobbying on policy specifics, such as the initial exclusion of milk-based sugar-sweetened beverages.
Criticism and Controversies
The inclusion of sweetened milk beverages under the Soft Drinks Industry Levy (SDIL) has generated considerable debate and criticism from various stakeholders, including industry representatives, retailers, and public health experts. A primary point of contention has been the perceived inconsistency and complexity of the policy’s implementation. Industry participants have expressed that the UK Government’s policy framework was inadequately designed for effective monitoring and evaluation, resulting in confusion and increased administrative burden during rollout. Retailers reported customer confusion caused by varied reformulation strategies across brands, such as some sugary drinks being reformulated to just below the levy threshold but still containing both sugar and sweeteners, leading to questions directed at retailers rather than manufacturers.
Another major criticism centers on the exclusion of milk-based sugar-sweetened beverages (SSBs) from the original SDIL, which was widely seen as an industry-driven decision influenced by lobbying efforts. Respondents indicated that the lobbying by the food and drink industry was instrumental in securing this exclusion, which undermined the goal of creating a level playing field across beverage categories. This selective targeting has also been perceived as unfair by industry actors who argue that other high-sugar product categories remain untaxed, intensifying feelings that the drinks industry is being unfairly singled out.
The beverage industry has also been criticized for strategies aimed at undermining scientific consensus on the link between SSB consumption and obesity. It has been documented that the industry has funded numerous studies that refute this link and has used such evidence to disseminate misleading claims through media channels. Systematic reviews have found that studies funded by the food and drink industry are significantly less likely to report positive associations between sugary beverage consumption and obesity, raising concerns about conflicts of interest and the validity of industry-sponsored research. Furthermore, the industry’s aggressive marketing and advertising practices have contributed to the perpetuation of obesogenic environments, disproportionately affecting individuals of lower socioeconomic status.
From an industry perspective, responses to the policy changes have been mixed. The Food and Drink Federation (FDF) expressed cautious approval of recent government amendments to the SDIL, noting that the changes acknowledge the technical and financial complexities companies face when reformulating products and aim to protect investments made towards promoting healthier diets. However, concerns remain regarding the practical challenges of implementing and enforcing the expanded scope of the levy, including integrating new products into existing taxation infrastructures and resolving potential legal disputes over definitions and sugar thresholds.
Despite these challenges, evidence suggests that the SDIL and similar taxation measures have been effective in reducing sugar consumption. Taxation has been associated with increased prices leading to decreased purchases, reformulation towards lower sugar content by manufacturers, and heightened consumer awareness about the negative health impacts of sugary drinks. Nevertheless, critics argue that a more comprehensive approach targeting a wider range of sugary products is necessary to achieve significant public health benefits.
Comparisons with International Sugar Tax Policies
Several countries have implemented sugar taxes on sugar-sweetened beverages (SSBs) with varying scopes and structures, offering useful comparisons to the recent inclusion of sweetened milk beverages under the Soft Drinks Industry Levy (SDIL) in the UK. These international policies highlight common objectives such as reducing sugar consumption, encouraging product reformulation, and generating revenue for public health initiatives.
In the United States, excise taxes on soft drinks are typically imposed at the distributor or manufacturer level rather than directly on consumers. For example, Berkeley, California introduced the first soda tax in 2015, levying one cent per ounce on distributors of specified sugar-sweetened beverages, excluding milk-based drinks, diet sodas, fruit juices, and alcohol. This narrow scope contrasts with the expanded UK SDIL, which now includes sweetened milk beverages, addressing a key limitation identified by industry and public health advocates alike.
The UK’s SDIL, introduced in 2018, taxes manufacturers and importers based on the sugar content of drinks in two bands: 18p per litre for beverages containing 5–8 grams of sugar per 100 millilitres, and 24p per litre for those exceeding 8 grams per 100 millilitres. Revenue from the tax is earmarked for funding sport in schools, reflecting a public health reinvestment strategy. Wales was an early adopter of sugar taxation, passing a 20% tax on sugary drinks in 2017 before the UK-wide SDIL rollout, indicating regional leadership in fiscal health measures.
Evidence from various countries suggests that sugar taxes effectively reduce purchases of high-sugar beverages, stimulate reformulation towards lower sugar content, and raise consumer awareness about the health risks of excess sugar intake. For instance, Portugal’s 2017 tax on non-alcoholic sweetened beverages led to measurable declines in sales, illustrating the potential health benefits of such fiscal policies. Similarly, the UK’s SDIL has prompted manufacturers to increase the use of artificial sweeteners to reduce sugar content, contributing to changes in consumer purchasing patterns with potential downstream impacts on obesity and diabetes prevalence.
Despite broad acceptance, some criticisms have emerged regarding the scope of sugar taxes. The SDIL has been viewed as an incomplete measure by some stakeholders, particularly due to its initial exclusion of milk-based drinks, which also contribute to sugar consumption. The recent policy shift to include sweetened milk beverages aims to address this perceived inequity and close loopholes exploited by manufacturers. Other countries have implemented or are considering broader sugar tax frameworks, with 108 nations worldwide having adopted some form of sugar tax by 2022, reflecting a growing global consensus on the role of fiscal measures in tackling diet-related health issues.
Future Developments and Prospects
The future trajectory of the Soft Drinks Industry Levy (SDIL) indicates ongoing policy adjustments and potential expansion of its scope. Current UK government consultations propose changes to the minimum sugar content threshold triggering the levy and reconsider exemptions, particularly concerning milk-based and milk substitute drinks. These proposals are part of a broader strategy to further reduce sugar consumption and obesity rates, with final decisions expected following consultations concluding in Autumn Budget 2025.
Industry stakeholders have acknowledged the levy’s role in encouraging reformulation and creating a level playing field across the sector, though some technical challenges remain. The government has been urged to engage more closely with the wider food and beverage industry once policy parameters are clearer to ensure precise communication and avoid ambiguities in implementation. Notably, lobbying efforts previously influenced the exclusion of milk-based sweetened beverages from the levy’s initial scope, highlighting the complex interplay between industry interests and public health policy.
Health advocacy groups continue to call for expanding the SDIL to cover currently exempt products, including juices without added sugar and sweetened milk-based drinks, to strengthen public health outcomes. While no UK-based case studies exist yet for milk-based beverages under the levy, related sugar reduction initiatives—such as the Public Health England programme targeting yoghurts and fromage frais—demonstrate the industry’s capacity for reformulation in response to health policies.
Reformulation efforts by producers and retailers have already led to measurable reductions in sugar content, which may influence health impact models projecting decreases in obesity, diabetes, and other chronic diseases. Increased use of artificial sweeteners within the soft drinks market is one such outcome of the SDIL’s influence. Despite some resistance from parts of the industry, the levy’s revenue is being protected and directed toward health-related funding commitments, affirming government resolve to use fiscal measures to combat sugar-related health issues.
Looking forward, greater collaboration between policymakers, health experts, and the food and beverage sector will be essential to refining the SDIL, expanding its coverage, and maximizing its health benefits across the UK population.
The content is provided by Avery Redwood, Lifelong Health Tips
