The sugar tax currently applied to fizzy drinks will be extended to milkshakes in a bid to stop children and adults drinking too much sugar, the Treasury has announced.
Popular milk-based treats will rise in price by up to 26p a litre unless they overhaul their recipes to contain less sugar.
The Government is also reducing the maximum amount that drinks can have before they are hit with the levy, in a bid to stop firms escaping the tax by putting in as much sugar as they are allowed without breaching the current threshold of 5g per 100ml.
The tax, first introduced by George Osborne when he was chancellor, is designed to encourage firms to use less sugar in their drinks. Since it first took effect in 2018, most of the best-known fizzy drinks have cut their sugar content and started using more artificial sweetener instead.
Rachel Reeves said at the last Budget that the Government would consider ending an exemption that has previously existed for drinks based primarily around milk or non-dairy substitutes.
The Treasury has now confirmed that it plans to go ahead with the change – which will apply to sweetened yoghurt drinks as well as milkshakes – in a bid to push companies to use less sugar.
Officials have calculated that 93 per cent of milky drinks currently on the market will be subject to the levy if they do not change their recipes.
The Treasury said that concerns taxing milkshakes would reduce children’s calcium intake had proven to be misguided, adding: “Whilst young people still do not consume the recommended level of calcium, milk-based drinks are not a significant contributor to intakes.
“Milk-based drinks only provide up to 3.5 per cent of calcium intakes for children aged 11 to 18 years, compared with 25 per cent from plain milk, and 38 per cent from cereal products, including fortified white bread.”
The threshold at which drinks get hit by the tax will fall from 5g of sugar per 100ml of liquid to 4g, the Government also said.
The changes, which are subject to consultation before they come into force, form part of an overhaul of tax laws which is designed to make the taxation system simpler and more efficient.
Treasury minister James Murray said: “We are determined to reduce the hassle of the tax system for British businesses and taxpayers.”
Other measures include making it easier for companies to get VAT relief on goods they have donated to charity, reducing the red tape on whisky makers trying to prove that their product is genuine Scotch, and abolishing the Valuation Office Agency which decides how much firms must pay in business rates on their premises.
In future HMRC will administer business rates and council tax directly, meaning that companies only have to deal with one Government body to pay the tax they owe.
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