Milkshakes and flavoured lattes will soon face a sugar tax for the first time as Labour prepares a major push to tackle rising obesity levels and improve public health.

Health Secretary Wes Streeting is expected to tell MPs that the long-standing exemption for milk-based drinks will be removed. Until now, the sugar levy has focused almost entirely on fizzy drinks, leaving many popular coffees and packaged milkshakes untouched despite their high sugar content.

Under the new plans, ready-to-drink coffees and milkshakes sold in shops and supermarkets will fall under the levy. At the same time, the government will lower the sugar threshold at which the tax applies, meaning more products and mainstream brands will be affected.

The measure forms part of a wide package of tax changes in this week’s budget as Chancellor Rachel Reeves looks for ways to close a thirty billion pound gap in the public finances. The extended levy is expected to raise up to one hundred million pounds a year from 2027.

Reeves has shelved previous proposals to increase the basic rate of income tax, leaving her instead to rely on a collection of smaller, targeted measures. Other planned changes include higher taxes on expensive properties, a pay-per-mile system for electric vehicles, new gambling taxes and a tourism levy.

Both the Conservatives and Reform UK have criticised the idea in the past. Nigel Farage has repeatedly argued that the sugar levy punishes ordinary people for everyday treats and has accused Sir Keir Starmer of creating a so-called nanny state.

Ministers argue that the policy is necessary to address a growing health crisis. Streeting has been especially vocal, warning that childhood obesity has reached alarming levels. Recent figures show that around one in five pupils finishing primary school meet the clinical definition of obese.

Streeting said earlier this month that the government “will not look away as kids get unhealthier”, adding that obesity limits children’s chances in life, fuels long-term health problems and places huge pressure on the NHS.

The original sugar levy was introduced in 2016 by then-chancellor George Osborne. It applied to drinks with more than five grams of sugar per one hundred millilitres. Many companies responded by reformulating their products to stay under that limit. Campaigners hailed the policy as a success, with the average sugar content of soft drinks falling by almost half.

Officials now say the threshold encouraged manufacturers to cluster their products just below the five-gram mark. By lowering the limit, the government hopes to continue reducing sugar levels and prevent companies from working around the rules.

Removing the exemption for milk-based drinks could spark similar reformulation. Some supermarket versions of popular drinks, such as caramel frappuccinos, contain more than nine grams of sugar per one hundred millilitres.

The revised levy will apply only to packaged drinks sold in shops. Drinks prepared freshly in cafés and restaurants will remain exempt. From April 2027, milkshakes with up to eight grams of sugar per one hundred millilitres will be subject to an eighteen pence per litre charge. Drinks with higher sugar levels will face a twenty-four pence levy.

Earlier this year, the Treasury consulted on expanding the tax. Officials dismissed claims that the change would harm children’s calcium intake, noting that milk-based drinks contribute only a small fraction of the calcium consumed by teenagers. Most calcium still comes from plain milk and fortified foods such as bread and cereals.

The government says the updated sugar levy is a central part of its strategy to create a healthier population and reduce long-term pressure on the NHS, even as political opponents accuse Labour of reaching too readily for the tax system.