News
The “Milkshake Tax”: What the Budget Changes Mean for Your Morning Coffee
11 Dec 2025
If you’ve been grabbing a bottled Frappuccino on your morning commute or treating the kids (or yourself) to a supermarket milkshake, you might want to pay attention to this one.
In the Autumn Budget on 26th November, the Chancellor confirmed the so-called “milkshake tax” extending the UK’s sugar levy to include milk-based drinks. That means ready-to-drink coffees, flavoured milks, chocolate milk drinks, and those bottled milkshakes in the chiller cabinet will all be affected from January 2028.
What’s changing?
The UK’s Soft Drinks Industry Levy has been quietly reducing sugar in fizzy drinks since 2018. Now it’s being extended to pre-packaged milk-based and milk-alternative drinks with added sugar, at a lower threshold of 4.5g per 100ml.
Plain unsweetened milk is safe, and café-made milkshakes remain out of scope. This only targets drinks with added sugar.
Why does it matter?
This isn’t really about raising tax revenue. The government is hoping manufacturers will reformulate products to avoid the levy altogether, just as they did with soft drinks. Between 2017 and 2024, milk-based drinks already reduced sugar content by 32.4%, so there’s plenty of room to go further.
One clever detail: the government has introduced a “lactose allowance” so the natural sugars in milk aren’t penalised. The levy only targets added sugar.
What should you expect?
By 2028, you’ll likely see lower-sugar versions of popular drinks and possibly some price changes. The existing levy shows that companies prefer reformulation over taxation, and consumers have been quite happy with the results.
What should businesses do?
If you’re in the food and drinks industry or operate a business that sells these products:
- Review your current product ranges and suppliers
- Keep an eye on reformulation announcements from major brands
- Consider how this might affect your pricing and margins
- Think about whether customer preferences might shift
You’ve got until January 2028 to prepare, which is plenty of time to plan ahead rather than react in a panic.
Questions about how Budget changes might affect your business? Get in touch to chat through what these changes mean for you.
