The levy will apply to packaged drinks, not those made in cafes and restaurants.
Mr Streeting confirmed the measure in the Commons on Tuesday, telling MPs: “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.”
Milk-based drinks are currently exempt from the soft drinks levy, also known as a sugar tax.
This came into force in 2018 and applies to drinks with at least 5g of sugar per 100ml.
Mr Streeting said that as well as extending the levy to milk-based products, the government will lower the threshold at which it can apply – to 4.5g of sugar per 100ml.
He said: “This government will not look away as children get unhealthier and our political opponents urge us to leave them behind.”
There has been a 46% reduction in sugar in fizzy drinks since the original tax came into force, with 89% of soft drinks sold in the UK now not paying the charge due to reformulation.
Modelling studies have found that this may have prevented thousands of cases of childhood obesity and reduced tooth decay.
However, the Labour government said UK sugar intakes remain about double the recommended level and launched a consultation in April to extend the tax.
The measure will be formally included in Rachel Reeves’s budget on Wednesday, when the chancellor is expected to announce a series of smaller tax rises to fill a £30bn blackhole, after scrapping a plan to raise income tax.
Companies have until 1 January 2028 to remove sugar or face the new charge, which the government argues will add £1bn in health and economic benefits.
The tax will apply to pre-packaged milk-based and milk-alternative drinks with added sugar like supermarket milkshakes, flavoured milks, sweetened yoghurt drinks, chocolate milk drinks, and ready-to-drink coffees.
Plain, unsweetened milk and milk-alternative drinks are not included.
Drinks that would come under the new proposal include: Starbucks Caramel Macchiato Iced Coffee (8.2g sugar/100ml), Shaken Udder Vanillalicious milkshake (8.4g sugar/100ml), Yazoo Strawberry Milk Drink (9.6g sugar/100ml), and Alpro Soya Chocolate long life drink (7.6g sugar/100ml).
Despite introducing the initial soft drinks levy, the Conservatives previously described the extension as a “sucker punch” to families during a cost of living crisis.
Reform UK leader Nigel Farage told the BBC he was “sick to death of a government telling us how we should live” and said they should focus on educating people who can then make healthy decisions.
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