Chancellor Rachel Reeves is poised to deliver a potentially bitter blow to Britain's coffee lovers in her upcoming Autumn Budget, scheduled for November 26.
The financial statement, which will outline the government's spending and revenue plans, is expected to feature a significant expansion of the existing Soft Drinks Industry Levy (SDIL).
What is the 'Milkshake Tax' and How Does It Affect Coffee?
Currently, the so-called 'sugar tax' applies to fizzy drinks like Coca-Cola and Irn Bru. However, reports suggest the Chancellor is now looking to extend this levy to milk-based products, including the packaged, ready-to-drink coffees sold in supermarkets.
This potential new 'milkshake tax' would mean these popular items lose their current exemption. The existing SDIL rules charge producers at least 18p per litre on drinks containing 5g or more of sugar per 100ml.
Stricter Limits Target Popular Brands
The Autumn Budget could introduce a double hit for manufacturers. Not only would the tax be extended to new product categories, but the sugar threshold for charging could also be lowered from 5g to 4g per 100ml.
This change would bring a swathe of new drinks under the levy's scope. For example:
- Starbucks Caffe Latte Iced Coffee contains 8.2g of sugar per 100ml.
- Costa Coffee's Frappe Creamy Tiramisu Iced Coffee contains 8.1g of sugar per 100ml.
Alarmingly, these sugar levels are almost double those found in some traditional fizzy pops. A can of Irn Bru, for instance, contains 4.5g of sugar per 100ml, while Dr Pepper has 4.3g.
Price Hikes and Recipe Changes Loom
Industry experts warn that if these changes are implemented, the cost could be passed directly to consumers. It is estimated that the price of affected bottled coffees could rise by up to five per cent.
Alternatively, the tax could force retailers to alter their recipes to avoid the charge, a move already made by brands like Ribena in response to the original sugar tax.
With the Budget announcement just days away, millions of Britons who regularly purchase these convenient coffee drinks may soon find their daily habit becomes more expensive.
