In the budget today, the Government has confirmed that pre-packaged sweetened milk-based and plant-based drinks will now be included in the Soft Drinks Industry Levy (SDIL) scope.
The Plant-based Food Alliance strongly support measures that promote public health and the SDIL has indeed been successful in reducing sugar in soft drinks. Historically, the exemption from the sugar tax for milk-based and plant-based drinks existed partly because the levy targeted nutritionally poor, sweetened soft drinks, not drinks with nutritional value.
The sugar threshold for triggering the levy will be lowered from 5g per 100ml to 4.5g per 100ml. These changes will take effect on 1st January 2028, giving manufacturers a transitional window to reformulate products.
We welcome the continued exemption given to unsweetened plant-based drinks given they are a nutritious choice and are included in several dietary guidelines around the world, including the UK.
For sweetened products, the Government has decided that sweetened milk-based drinks will have a ‘lactose allowance’. This means the 4.5g threshold will not include naturally occurring sugars so the levy will only be applied to added sugars. Unfortunately, the Government has not applied the same logic to plant-based drinks to account for the naturally occurring sugars, therefore these products will be taxed on total sugars.
The PbFA has responded to this as follows:
“We strongly support measures that promote public health and welcome the continued exemption given to unsweetened plant-based milk substitute drinks.
“However, we are incredibly disappointed with the introduction of a lactose allowance for sweetened milk drinks, with no equivalent to account for the naturally occurring sugars found in sweetened plant-based milk substitute drinks. This means that a sweetened dairy-based product will be taxed less than a sweetened plant-based milk substitute with the same amount of added sugar.
“The allowance undermines the intent of the SDIL initiative and risks confusion about the true sugar content of sweetened milk drinks. Favouring sweetened milk-based products over sweetened plant-based products is a missed opportunity to deliver fairness and clarity and creates an uneven playing field. A consistent policy across all sweetened beverages would better support health goals and ensure fairness across the market.”
This policy decision means dairy products gain a market advantage simply because its naturally occurring sugar is not counted. This risks pushing plant-based products above price parity, and discriminates against those consumers who cannot consume dairy products for a range of valid reasons. It also overlooks that many plant-based drinks are an important source of nutrients, like unsaturated fats, fibre, vitamins and minerals. Furthermore, it ignores environmental impact, for example, plant-based drinks use less land, generate fewer greenhouse gases and require less water.
We urge the Government to reconsider this and deliver equivalence for both sweetened dairy-based drinks and sweetened plant-based milk substitutes.