Government reconsiders plant-based milk exemption from SDIL
In a review of current Soft Drinks Industry Levy (SDIL) exemptions, the Government is considering extending the tax to milk-based drinks such as pre-packaged milky coffees and milkshakes — including those made with dairy substitutes.
‘With a view to further drive down the sugar content in soft drinks’ the Government is reviewing the operational structures of the SDIL before taking a decision on whether to remove the existing exemptions for milk-based and milk substitute drinks.
An evaluation of SDIL perimeters will also be conducted, leading to a reassessment of ‘whether the 5g threshold should be lowered to encourage sugar reductions in drinks below this cut off’.
The Government notes that it is ‘not seeking to revisit the fundamental tax design and scope’ and that the SDIL will remain ‘a tax on pre-packaged soft drinks with added sugar’. Alcoholic drinks, soft drinks containing only natural sugars (such as pure fruit juice) and drinks made on-site in cafés won’t be considered as part of the review.
“As young people only get 3.5% of their calcium intake from milk-based drinks, it is likely that the health benefits do not justify the harms from excess sugar.”
Under current regulations, milk substitutes remain exempt from the SDIL providing they contain at least 120mg of calcium per 100ml of plant-based liquid (compared to 75ml of cows’ milk per 100ml of liquid). This exemption was aimed at ensuring the SDIL did not ‘disincentivize sufficient consumption of calcium, especially among young people’. But because of the high sugar content of many milk-based and plant-based milk drinks the Government deems it necessary to reconsider the case.
“As young people only get 3.5% of their calcium intake from milk-based drinks, it is likely that the health benefits do not justify the harms from excess sugar. By bringing these drinks into the SDIL, the Government would introduce a tax incentive for manufacturers of these drinks to reduce sugar in their recipes,” it comments.
A range of experts, academics and interested parties are expected to be engaged with during the review, with HM Treasury and HMRC officials conducting meetings from December onwards. The review is due to conclude in spring 2025, with any adjustments to the SDIL taking effect following the autumn 2025 Budget.
By Rosie Greenaway, editor