Chancellor Rachel Reeves set to announce tax on milkshakes in Budget

The Soft Drinks Industry Levy currently applies to drinks like Coke.

Producers pay at least 18p per litre on soft drinks which contain 5g or more of sugar per 100ml.

However, Ms Reeves is also expected to cut there threshold to 4g per 100ml.

The changes would come into effect in April 2027, according to The Telegraph and is expected to raise between £50million and £100million.

It is expected to cause upset in the soft drinks industry, claiming a higher levy could push up supermarket prices by five per cent.

The industry also claims it would reduce calorie intake by about half a grape per person, per day.

After u-turning on her plan to raise income tax, Ms Reeves has turned towards smaller tax measures.

Raising income tax would have broken one of Labour’s election manifesto promises.

However, it means the Government is required to raise funds from increasing taxes on electric vehicles, expensive homes among others.

Shadow Chancellor Mel Stride said that if the “reports are true, Labour’s new milkshake tax moves the goalposts yet again for an industry that’s already cut sugar and made changes responsibly”.

“It will see businesses that played by the rules punished,” he added.

“With products suddenly dragged into the tax net - all to save Rachel Reeves’s skin.”

The Telegraph said a Treasury spokesman declined to comment on Budget speculation.

However, a decision on smaller measures are yet to be finalised.

The widely known “sugar tax” or the Soft Drinks Industry Levy, came into effect in 2018 under the Conservatives.

It is currently set at 18p per litre or 24p per litre for higher-sugar drinks.

The tax aimed to tackling obesity by reducing the sugar content in products which were popular with children,

Consultation was published by the Treasury on changes to the levy earlier this year with final decisions due for the Budget.

Milk-based drinks have previously been exempted from the levy as concerns surrounded children not having enough calcium.

When the consultation was announced in Spring, a Treasury spokesman rejected the claims, saying: “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,” the spokesman said.

“Compared with 25 per cent from plain milk, and 38 per cent from cereal products, including fortified white bread.”