Starting in April 2027, milkshakes and lattes sold in the United Kingdom will carry a new sugar tax — a move that could reshape how Britons order their favorite coffee and dessert drinks. The policy, quietly announced by HM Treasury but not yet formally legislated, targets beverages with added sugars above a threshold yet to be specified, following the precedent of the 2018 Soft Drinks Industry Levy. While industry insiders call it the "milkshake tax," officials have avoided the term, preferring "sugar levy on sweetened beverages." The expected revenue: between £50 million and £100 million annually, a figure that reflects both the popularity of these drinks and the uncertainty around consumption patterns.
Why now? The health crisis behind the tax
The UK has one of the highest rates of childhood obesity in Europe, with nearly 1 in 3 children aged 10-11 classified as overweight or obese, according to the National Child Measurement Programme. Type 2 diabetes, once rare in young people, is now diagnosed in teenagers at alarming rates — largely tied to sugary drinks. The 2018 levy on soft drinks, which targeted beverages with more than 5g of sugar per 100ml, led to a 34% reduction in sugar content across the industry within two years. But milkshakes and lattes slipped through the cracks. A standard 500ml chocolate milkshake from a major chain can contain over 40g of sugar — more than the daily recommended limit for adults. A large caramel latte? Often 30g or more. That’s not a treat. It’s a daily habit.
What’s changing — and what’s still unclear
Unlike the 2018 levy, which applied only to pre-packaged drinks, this new tax will hit cafes, fast-food outlets, and convenience stores directly. But here’s the twist: we don’t yet know the sugar threshold. Will it be 5g per 100ml like soda? Or higher, given that milk naturally contains sugar? And will small independent cafés get exemptions? The government has not said. What we do know is that the tax will be collected at point of sale, likely through a new digital reporting system tied to HMRC’s existing framework. Businesses will need to report sugar content by product category, and pay a fee based on volume and sweetness.
Industry groups are already bracing. The British Coffee Association warned that the tax could hit small businesses hardest, especially those without the resources to reformulate recipes or absorb cost increases. Meanwhile, health advocates like the British Heart Foundation are cautiously optimistic. "This is a logical next step," said Dr. Eleanor Whitmore, a nutrition epidemiologist at Imperial College London. "We’ve seen what happens when you put a price on sugar. People change. Companies change. Lives improve."
Who’s affected — and how much will it cost?
Consumers may see prices rise by 10-25% on the sweetest drinks. A £3.50 latte could jump to £4.20. A milkshake that costs £4.99 might hit £6.25. But here’s the thing: many people are already switching. Sales of high-sugar lattes have dropped 18% since 2022, according to Kantar data, as customers opt for "skinny" versions or unsweetened alternatives. Starbucks UK reported a 22% increase in oat milk orders with no added sugar last year. Costa Coffee quietly removed caramel syrup from its standard recipe in 2024. The market is already adapting.
Still, the tax won’t just affect consumers. It could reshape supply chains. Dairy farmers may see demand shift toward lower-sugar products. Sweetener manufacturers like Tate & Lyle are already developing new blends that reduce sugar without compromising taste. And don’t be surprised if we see more "sugar-free" labels — even on products that never had sugar to begin with.
The bigger picture: A decade of sugar policy
The 2018 soft drinks levy was a landmark. It raised £240 million in its first year, most of which went to school sports programs. But it only covered fizzy drinks — not milk-based ones. That gap has widened as milkshakes and sweetened coffee drinks have become daily staples, especially among teens and young adults. The Office for National Statistics found that 43% of 16-24-year-olds drink a sugary coffee or milkshake at least three times a week. That’s not occasional indulgence. It’s routine.
The new tax isn’t just about revenue. It’s about normalization. By making the sugariest options more expensive, the government hopes to reframe them as luxuries — not defaults. It’s the same logic behind cigarette taxes, alcohol pricing, and plastic bag charges. The goal isn’t to ban anything. It’s to make the healthy choice the easy one.
What’s next? The road to April 2027
Legislation is expected to be introduced in Parliament by autumn 2026. There will be a public consultation, likely starting in early 2026, where cafes, dairy producers, and consumer groups can weigh in. The government has signaled it will allow a 12-month transition period before enforcement begins — meaning businesses have until April 2028 to fully comply. But many will act sooner. Why? Because customers are already voting with their wallets.
Meanwhile, the Treasury’s £50m–£100m revenue projection is just a guess. If sugar content drops as sharply as it did in 2018, the take could be far lower. That’s not a failure — it’s the point. The best outcome? A tax that raises little money because nobody buys the sugary versions anymore.
Frequently Asked Questions
Which drinks will be taxed under the new UK sugar levy?
The tax will target milkshakes and lattes with added sugars above an undisclosed threshold, likely similar to the 5g per 100ml standard used in the 2018 soft drinks levy. It will apply to drinks sold in cafes, fast-food chains, and convenience stores — not just pre-packaged products. Natural milk sugars won’t count, but added syrups, sweeteners, and flavorings will.
How much extra will consumers pay?
Prices could rise by 10% to 25% on the sweetest drinks, depending on sugar content and how businesses choose to absorb or pass on the cost. A £4 milkshake might become £4.80, and a £3.75 caramel latte could jump to £4.50. However, many chains are already reformulating recipes, so the price hikes may be smaller than feared — or even nonexistent if customers shift to lower-sugar options.
Will small coffee shops be exempt?
No official exemptions have been announced, but the government has signaled it will consider support for small businesses during the transition. This could include simplified reporting, phased implementation, or grants to help reformulate recipes. The British Coffee Association is lobbying for a revenue cap based on annual turnover — under £500,000 — to avoid disproportionate burdens on independents.
How does this compare to the 2018 soft drinks levy?
The 2018 levy targeted fizzy drinks with more than 5g of sugar per 100ml and raised £240 million in its first year, funding school sports. This new tax expands the scope to milk-based beverages, which have seen a 40% sales increase since 2019. Unlike the previous levy, this one will be collected at point of sale, requiring real-time reporting from retailers — a more complex system, but one that captures the full market.
What impact is this expected to have on public health?
Experts predict a 15-20% drop in sugar consumption from these drinks within three years, potentially preventing 50,000 cases of obesity-related illness over a decade. A 2023 University of Oxford study found that every 10% reduction in sugary drink sales correlated with a 2.5% drop in childhood BMI scores. The real win? Shifting cultural norms — making a sugary latte feel like a special treat again, not a daily habit.
When will the final rules be published?
The government plans to release draft legislation in early 2026, followed by a 12-week public consultation. Final rules are expected by late 2026, with enforcement beginning April 2027. Businesses will have until April 2028 to fully comply, but early adopters may benefit from consumer goodwill and reduced regulatory risk.
