Soft Drinks Industry Levy UK 2028 — What Changes for Businesses

The UK Soft Drinks Industry Levy (SDIL) is scheduled to change on 1 January 2028. The published measure lowers the sugar threshold for a liable packaged soft drink from 5 grams to 4.5 grams of added sugar per 100 millilitres. It also removes the current exemptions for certain milk-based and milk-substitute drinks with added sugar, subject to the final legislation and regulations.

The reform matters mainly to businesses that manufacture, package or import packaged soft drinks. It is not a new tax on every drink bought by a consumer, and it does not apply to open-cup beverages such as drinks bought in cafés under the published scope. The final levy rate and detailed compliance steps should be checked with HMRC before the 2028 start date.

What is the Soft Drinks Industry Levy?

SDIL is a levy on liable packaged soft drinks containing added sugar. The regime is aimed at the production and importation of drinks rather than ordinary household purchases. A business may need to consider SDIL where it manufactures or imports a drink that falls within the statutory product and sugar rules.

The levy is separate from VAT, Corporation Tax and ordinary product pricing. A drink being subject to SDIL does not by itself determine its VAT treatment or the retail price a customer will pay. Likewise, a product's branding or marketing description is not enough to decide whether the legislation applies; the formulation, packaging and supply route matter.

What changes in 2028?

From 1 January 2028, the published policy measure will:

• lower the added-sugar threshold from 5g to 4.5g per 100ml;
• remove the current exemption for milk-based drinks with added sugar;
• remove the current exemption for milk-substitute drinks with added sugar; and
• apply the sugar threshold to the relevant drink formulation, with the published measure describing how sugars from lactose in milk or milk products are treated for milk-based drinks.

The measure is intended to create a more level treatment between comparable packaged drinks and encourage reformulation. HMRC says the changes are expected to affect a relatively limited part of the market after expected reformulation, but a product-specific assessment is still required.

Which businesses should review their products?

The most relevant businesses are:

The table is a preparation checklist, not a legal classification. Borderline products should be checked against the detailed SDIL legislation and HMRC guidance, especially where a business both manufactures and imports drinks or uses several packaging formats.

Added sugar, lactose and product records

The key number is measured per 100 millilitres, so a product should not be assessed only by looking at its total sugar per bottle or can. Keep the recipe, ingredient specifications, nutrition calculations, pack size and manufacturing or import records together. A reformulation that reduces sugar below the threshold may change the levy position, but the evidence should match the product actually sold.

For milk-based drinks, the published measure explains that the thresholds apply to total sugars after taking account of sugars present from lactose in milk or milk products. Milk-substitute drinks have a separate change: the current exemption for added-sugar milk substitutes is removed and the threshold applies to the total sugar content. The final technical wording and HMRC guidance should be checked before relying on a formulation decision.

What is not changing in this announcement?

The 2028 measure does not mean every drink will become liable. HMRC's published material says open-cup beverages, such as drinks bought in cafés, remain unaffected by this specific change. It also does not provide a new consumer tax rate or a universal surcharge at the till.

Do not use the 4.5g threshold as a substitute for checking the whole SDIL regime. Product scope, packaging, manufacturing, importation, exemptions and the business's role in the supply chain can all matter. If a drink is close to the threshold, preserve the formulation evidence and ask a specialist to review the result.

How should a business prepare?

Businesses should also model commercial effects separately from the tax classification. A recipe change may alter ingredient cost, shelf life, labelling, consumer demand and supply contracts even where the levy outcome is the main reason for the review. The UK tax changes guide provides wider policy context, while this page focuses on SDIL.

Policy status and final guidance

HMRC published the 2028 measure in July 2026 after a previous consultation on strengthening SDIL. Legislation is expected to be introduced in Finance Bill 2026–27, and consequential amendments will be made to the SDIL regulations. Until the final law and guidance are available, treat the date and threshold as the published policy position rather than a complete operational manual.

If the final legislation changes the threshold, product exemptions, registration process or effective date, this guide must be refreshed before businesses rely on it. A company should not change a live product or tax return solely on the basis of a summary article.

Frequently Asked Questions

Evidence and decision checks

A reliable soft drinks industry levy uk 2028 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable soft drinks industry levy uk 2028 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable soft drinks industry levy uk 2028 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

This guide is a general explanation of the published SDIL policy and does not classify a specific product or replace professional tax advice.

Official sources

• HMRC: Soft Drinks Industry Levy changes
• HMRC: strengthening the Soft Drinks Industry Levy consultation
• HMRC: Finance Bill 2026/27 draft legislation and technical documents

These HMRC sources are the official references for the 1 January 2028 commencement, 4.5g sugar threshold, milk-drink exemption changes, product scope and draft-legislation status discussed here.