Budget 2025 latest: Sugar levy on milkshakes and lattes confirmed as first tax hike in Rachel Reeves’s Budget

A new tourist tax can be levied on overnight stays if local mayors decide to introduce the measure, the Government has announced.

Local leaders in England will be given the power to impose a “modest charge” on visitors, the Ministry of Housing, Communities and Local Government said.

Announcing the measures ahead of the Budget on Wednesday, Local Government Secretary Steve Reed said: “Tourists travel from near and far to visit England’s brilliant cities and regions.

“We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”

A consultation on details of the measure will run until February 18.

With Labour’s second autumn Budget taking place on Wednesday, speculation about further tax rises has grown rife.

She has warned she will not be making “easy choices” at the fiscal event on 26 November, as No 10 looks appears less concrete on its commitment not to raise taxes on “working people”.

This means no increase to the headline rates of income tax, VAT or national insurance contributions.

The Independent’s Albert Toth reports:

Producers of milk-based drinks and representatives of the dairy industry raised concerns over the proposed changes to the sugar tax and what it could mean for their products.

A document released by the government has revealed “strong opposition” from the dairy industry, major producers, and trade bodies, with some manufacturers worried about how the changes could affect the taste of the product.

The report said: “There was concern that reducing added sugar would compromise taste, leading to consumer rejection.

“Respondents stated that reformulated products (where sugar reduction impacts mouthfeel, viscosity and texture) often fail taste tests or are rejected by retailers and consumers.”

The Chancellor is said to be introducing limits on how much employees can stash in salary sacrifice schemes before it becomes subject to national insurance.

Often integrated into pension plans, this offers a tax-efficient route for workers to enhance their retirement savings.

Reports suggest she could cap this at £2,000 a year, which would reduce how much people put away in their pension pots.

This could put a dent in take-home pay for those who use the scheme to stay in a lower tax band.

The sugar tax, introduced by the Conservative government in 2018, applies to manufacturers of pre-packaged soft drinks such as those sold in cans and cartons in supermarkets.

The tax, also known as the soft drinks industry levy (SDIL), aimed to help tackle obesity, including among children.

The existing levy has prompted a 46 per cent average reduction in sugar in the affected soft drinks.

The tax will now also apply to products such as packaged milkshakes, coffees and sweetened yoghurt drinks, but not drinks made on site in cafes and restaurants.

The Independent’s Business and Money Editor Karl Matchett reports:

Many, of course, cannot hope to save £1,000 a month. In fact, data from the Building Societies Association suggests more than one in four British adults (27%) have less than £1,00 in total available savings.

Yet those who do have the money available to save definitely tend to make full use of their maximum ISA allowance one way or another.

Zopa Bank have confirmed to the Independent that during the last full financial year, 46% of their Cash ISA customers funded more than £12,000 to their accounts. So far this year – so from April onwards – 34% have already done the same.

A third (33%) maxed out their Zopa cash ISA last financial year and almost a quarter (24%) have done so already this time around.

The Independent’s political correspondent Millie Cooke reports:

Sir Keir Starmer has argued that some criticism of the chancellor’s upcoming Budget has gone “beyond fair scrutiny”, reiterating that women in public life get “much more abuse and criticism than men”.

It comes after Rachel Reeves, the UK’s first female chancellor, suggested in a recent interview with The Times that some criticism towards her is motivated by sexism.

Responding to her comments over the weekend, the prime minister said: “There’s abuse and criticism of all politicians, but I’m acutely aware that women get much more abuse and criticism than men do and I think it’s about time we acknowledge that.”

Asked on Tuesday whether the prime minister thinks any criticism of the budget is misogyny, his spokesperson told reporters: “The prime minister and the government always accept that scrutiny is part and parcel of the job that the government does.

“The point that the prime minister was making at the weekend is that sometimes criticism and abuse arises which goes beyond fair scrutiny and that was the point he was setting out.”

Sir Keir also reiterated his “faith” in his chancellor, despite mounting speculation over her future amid criticism of the Budget.

“The prime minister has spoken in the last couple of days about his pride in having the first female chancellor in post and he has talked about the good job that she is doing. So his faith in her is clear”, his spokesperson said.

Milkshakes will be hit by the sugar tax, Health Secretary Wes Streeting told the Commons, as he pledged not to look away “as children get unhealthier”.

Speaking at health questions, he said: “Obesity robs children of the best possible start in life, hits the poorest hardest, sets them up for a lifetime of health problems and costs the NHS billions.

“So, I can announce to the House, we’re expanding the soft drinks industry levy to include bottles and cartons of milkshakes, flavoured milk and milk substitute drinks.

“We’re also reducing the threshold to 4.5 grams of sugar per 100 millilitres. This Government will not look away as children get unhealthier and our political opponents urge us to leave them behind.”