Rachel Reeves slaps 'milkshake tax' on millions of Brits - what it means for your takeaway

Rachel Reeves has been condemned for planning yet another raid on Britons, despite overseeing the highest tax rate in modern history. The Chancellor has reportedly drawn up plans to expand the government's sugar tax to milk and yogurt-based drinks for the first time.

The so-called "Milkshake Tax" will increase prices by as much as 24p a litre, with 93% of drinks on the market forced to either see customers pay the fee or change their recipes. Ms Reeves also plans to hike the current tax applied to pop, after concluding that the current rate isn't doing enough to dissuade sweet-toothed shoppers. The Treasury published a consultation today, claiming that the move is necessary because the current tax isn't doing enough to cut sugar consumption.

Tory shadow Chancellor Mel Stride blasted: "At a time when they have already pushed up the cost of living for families, Labour seem determined to pile on even more costs with this new milkshake tax."

"Not content with hiking taxes to record highs, increasing everyone's bills by £1,100 and increasing inflation - this is a sucker punch to households who are being left poorer by this Labour government."

Meanwhile the Institute for Economic Affairs think tank condemned the whole sugar tax policy as a "dramatic failure".

Dr Christopher Snowdon, head of lifestyle economics, said: "The sugar tax has been such a dramatic failure that it should be repealed, not expanded."

"It has been costing consumers £300 million a year while childhood obesity rates have continued to rise.

"To claim it has been a success on the basis of a hypothetical reduction of one calorie a day is absurd. Sugar taxes have never worked anywhere."

He also suggested the move could be a breach of Labour's manifesto pledge on tax.

Mr Snowdon asked: "What happened to Starmer's promise to not raise taxes on working people?"

The sugar tax is currently set at 18p a litre, or 24p a litre for drinks with the highest amount of sugar.

The Treasury plans on lowering the threshold at which the tax kicks in from 5g of sugar per 100ml to 4g.

Milk-based drinks were not initially included in George Osborne's tax, on the grounds it could limit children's calcium intake.

However the Treasury now says: "Whilst young people still do not consume the recommended level of calcium, milk-based drinks are not a significant contributor to intakes."

Exchequer Secretary James Murray said: "We recognise that many products have been reformulated to just below the 5g sugar per 100ml threshold."

"Nearly a decade on, we believe it is time to set a more ambitious target. In addition, while there is no doubt about the nutritional benefits of plain milk, it remains an anomaly that sugary pre-packaged milkshakes and other milk-based drinks are exempt from the levy.

"This consultation outlines pragmatic steps to extend the SDIL's reach and amplify its impact.

"We propose measures that could save thousands more from becoming overweight or living with obesity, ensuring the levy remains fair, robust, and effective while minimising burdens on businesses."