UK Sugar Tax Expands: What Brands Need to Know Now

The UK Government has announced major changes to the Soft Drinks Industry Levy (SDIL), effective January 2028. These changes to the UK sugar tax will bring milk-based and plant-based drinks with added sugar into scope for taxation.

But that’s only half the picture. At the same time, the sugar threshold is being reduced to match the High Fat, Salt and Sugar (HFSS) regulations which restrict where and how certain food and drink products can be sold or promoted in-store and online.

Together, SDIL and HFSS create a more complex compliance environment. Brands now need to reformulate not only for sugar content, but also to improve nutrient density to remain competitive, visible and profitable on UK shelves.

UK SDIL Expansion: New Rules & Reduced Sugar Threshold

Currently, SDIL applies to sugary soft drinks - when the sugar tax was introduced, milk-based and dairy-alternative beverages were exempt. This will now change when the new rules come in.

SDIL new rules include:

• Pre-packaged milk-based drinks (e.g. milkshakes, flavoured milk, bottled lattes, ready to drink coffees) with added sugar will be taxed.

• Plant-based milk alternatives (e.g. sweetened oat, almond, soy drinks) will also be taxed if sugar thresholds are met.

• The sugar threshold drops from 5g to 4.5g per 100ml.

Continued exemptions from SDIL:

• Freshly made drinks (served in cafés, bars or restaurants) remain exempt.

• Plain milk and unsweetened milk-based drinks remain excluded.

Other considerations in the rules cover natural occurring sugars in milk and it's alternatives with a 'lactose allowance'.

When Do the SDIL Changes Take Effect?

The SDIL expansion is planned to begin 1 January 2028, but reformulation, relabelling, and supplier data coordination can take months or years.

Companies will need to:

How Does This Relate to HFSS?

HFSS (High Fat, Salt and Sugar) regulations in the UK have already begun restricting store placement and promotion of food and drink products that exceed set nutrient thresholds.

So, while SDIL applies a tax on sugary drinks, HFSS limits the visibility and promotion of all foods and drinks high in fat, salt or sugar. That means your product could face both taxation and promotional limits.

However, with the lowering of the SDIL sugar threshold, the two regulations will now be more aligned for products in the UK.

What Does This Mean for UK Beverage Brands?

If you make or sell products like:

• Flavoured milk or milkshakes
• Sweetened plant-based drinks
• Pre-packaged coffees and milkshakes

Then your product may now be subject to:

• Tax under SDIL
• Promotion restrictions under HFSS
• Consumer scrutiny around sugar and nutritional quality

That means your reformulation strategy needs to address multiple regulatory frameworks at once. Sugar reduction alone may not be enough if fat, salt or fibre levels also push your product into HFSS classification so your strategy will need to be to reformulate to avoid the levy and reformulate to improve nutrient score and allow promotion

Food Formulation Software for SDIL & HFSS Compliance in the UK

Across the Trustwell Connect platform, our solutions support the food industry from farm to fork with modules that speed up processes and improve efficiency. Including:  

• Food formulation software to virtually reformulate and improve HFSS scores in one workspace - without the lab analysis.
• Evaluate your products against HFSS models.
• Produce UK regulation-compliant labels as well as global labelling formats for exporting to the US, EU, Asia, and more. 

Reformulation takes time. So does adjusting labelling, packaging, supplier statements and promotion strategies, even with a solution that helps labelling 5x faster.

The most successful brands won’t be the ones reacting in 2027. They’ll be the ones starting today — aligning product development, regulatory and marketing teams around a shared, accurate dataset and a clear plan.

Discuss your Food Formulation Software needs by getting in touch.