UK Plans Changes to Soft Drinks Industry Levy from 2028

The UK government has published draft legislation proposing changes to the soft drinks industry levy as part of Finance Bill 2026.

The main change is a reduction in the sugar threshold at which drinks become subject to the levy. From January 1, 2028, the threshold would fall from 5 grams to 4.5 grams of sugar per 100 millilitres.

The draft rules also provide more detail on how sugar content should be calculated for milk-based drinks and plant-based alternatives.

Natural lactose would generally remain excluded from the sugar calculation. However, added sugar and certain sugars created through lactase treatment could be included when determining whether a drink is subject to the levy.

The legislation also clarifies the treatment of drinking yoghurts. Products that meet specific fermentation conditions would be classified as food rather than beverages and would therefore remain outside the scope of the levy.

In addition, Tax Authorities would receive powers to introduce detailed rules on how drink quantities are measured and how particular products are classified.

The proposed changes are intended to expand and clarify the existing levy framework and may require beverage manufacturers to review product formulations, sugar calculations and product classifications before the new rules take effect.

The measures are currently subject to technical consultation. Interested parties can provide feedback until September 2026.

Subject to the outcome of the consultation and parliamentary approval, the revised soft drinks industry levy rules are expected to apply from January 1, 2028.