Budget 2025: Milkshakes and Lattes Hit with Sugar Tax

Milkshakes and lattes will be hit with a sugar tax for the first time in the UK.

The tax will only apply to packaged drinks, including bottles and cartons of:

• milkshakes
• flavoured milk drinks
• yoghurt drinks

Drinks made in cafes are excluded for the time being. Plain, unsweetened milk and milk-alternative drinks are also not included.

Currently, milk-based drinks are exempt from a “sugar tax” which was introduced in 2018 and applies to all soft drinks with at least 5g of sugar per 100ml.

Extending the tax to milk-based drinks aims to help tackle obesity, according to Health Secretary Wes Streeting.

The government is also expected to lower the threshold that which the sugar tax applies to 4.5g of sugar per 100ml.

Food manufacturers have until 1 January 2028 to reduce how much sugar is in their drinks or pay the new charge, which is estimated to raise £1bn.

So how much will it cost you?The exact cost of individual drinks affected by the tax is yet to be seen.

However, based on current estimates, companies will need to pay:

19.4p per litre for drinks containing 4.5g-7.9g of sugar per 100ml

25.9p per litre for drinks containing 8g of sugar per 100ml

Our view

“In our view, extending the sugar tax to include milk-based drinks is an effective way to close a loophole in a measure designed to improve public health and tackle serious conditions such as obesity and diabetes.

Research has shown that following the initial introduction of the levy in 2018, sugar consumption among the population has fallen. The damaging effects of excessive sugar consumption have long been documented and incentivising manufacturers to reformulate drinks helps to broaden the range of options available for shoppers and provide healthier alternatives.

However, the government needs to ensure that the change doesn’t contribute to already high food inflation. Which could worsen pressure on households at the checkout.”

The sugar tax change, along with a raft of others will be announced as part of Chancellor Rachel Reeve’s Budget announcement at 12:30pm today. 

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