Assessing recent changes to the Soft Drinks Industry Levy

The Soft Drinks Industry Levy (SDIL) is a tax on pre-packaged soft drinks with added sugar. Introduced in 2018, the government's stated aim was to reduce obesity (especially among children) by reducing the amount of added sugar in soft drinks, and encouraging consumers to switch to less sugary drinks (HMRC, 2016). Currently, drinks containing between 5 and 8 grams (g) of sugar per 100 millilitres (ml) are taxed at 19.4p per litre, and drinks containing over 8 g per 100 ml are taxed at 25.9p per litre. Drinks with sugar content below 5 g per 100 ml are not subject to the levy. At the 2025 Autumn Budget, the government announced two reforms to the SDIL, to be implemented in January 2028. First, the minimum sugar content at which the levy applies will be reduced from 5 g per 100 ml to 4.5 g per 100 ml, bringing drinks with between 4.5 and 5 g of sugar per 100 ml into scope of the tax. Second, pre-packaged milk-based and milk-alternative drinks with added sugar (which were initially exempt from the SDIL) will be brought into scope. In this report, we assess the likely effect of these reforms on sugar consumption. Given the SDIL's explicit aim of reducing childhood obesity, we examine how impacts vary for households with and without children. We also focus on households who get the highest proportion of their total calories from free sugar, both because these households are most affected by the changes and because they are most likely to be consuming unhealthy amounts of sugar (with consequences for their long-term health). Throughout the report, we use product level data from Worldpanel by Numerator's GB Take Home panel, 1 January 2014 to 31 December 2024. All analysis and interpretation were undertaken independently of Worldpanel by Numerator. All conclusions are exclusively those of IFS and should not be attributed to, or interpreted as representing the views of, Worldpanel by Numerator.