UK to end sugar tax exemption for milk-based drinks

LONDON, Nov 25 (Reuters): Britain will scrap a sugar-tax exemption for pre-packaged milk-based drinks, including bottled milkshakes and milky coffees, the health department said on Tuesday, as part of efforts to curb an "obesity epidemic".

The sugar tax, also known as the Soft Drinks Industry Levy (SDIL), targets pre-packaged drinks such as those sold in cans and cartons in supermarkets.

It was introduced in 2016 by the then-Conservative government to help drive down obesity, particularly among children, offering a tax incentive for drinks producers to reduce sugar in their recipes.

The health department said the exemption will end in January 2028, giving the soft drinks industry two years for reformulation.

It said "open-cup" milkshakes prepared in cafes, bars and restaurants will remain out of the scope of the tax, as will plain cow's milk, and other milk drinks without added sugar.

However, the government will reduce the current lower threshold at which SDIL applies from 5g of total sugar per 100ml to 4.5g of total sugar per 100ml.

It will also remove the exemption for milk substitute (plant-based) drinks with added sugar.

"The government remains committed to addressing the obesity epidemic and considers prioritising a system of prevention to be instrumental in tackling the health and economic impacts of obesity," the health department said.