Yesterday’s budget saw Chancellor Jeremy Hunt confirm that the government is planning to introduce excise duty on vaping products from October 2026, with the aim of making the habit more expensive to deter non-smokers, particularly young people.
Vapes are currently only subject to standard VAT, making them significantly cheaper than traditional tobacco products.
The government yesterday opened a public consultation seeking views on the design and implementation of a new UK-wide Vaping Products Duty. The consultation will run until 29 May.
The rates being proposed are £1.00 per 10ml for nicotine-free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg of nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg of nicotine or more per ml.
It is proposed that the duty will be chargeable at the point of their manufacture in, or importation into, the UK.
Hunt noted that vapes can play a positive role in helping people quit smoking. As a result, the government plans to introduce a one-off increase in tobacco duty at the same time as the new vaping tax to maintain the financial incentive to choose vaping over smoking. This will be £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.
Jefferies analyst Owen Bennett noted the tax could benefit larger players such as British American Tobacco (BAT) by making it harder for smaller players to compete.
“BAT, especially given its highly profitable broader cigarette business, can afford to swallow the tax and not adjust prices,” he said, whereas it could make smaller firms’ products unviable.
BAT said it supported the introduction of a “low” excise tax on the nicotine-infused liquid in vapes to better control the market, but noted that a tax linked to nicotine content would be difficult to enforce.
“We encourage the government to implement a vape tax sooner than October 2026 to tackle the illicit market that is already prolific,” a BAT UK spokesperson added.
Deborah Arnott, Chief Executive of Action on Smoking and Health, noted that putting excise duty on vapes would give much needed additional powers to Border Force and HMRC to stop the import of illegal vapes, which are said to be flooding the market and fuelling the rise in underage vaping. “These are powers they already have for tobacco which helped reduce the consumption of illegal cigarettes by 80% between 2000 and 2021,” she said.
“The additional increase in tobacco taxes is welcome, as keeping vaping cheaper than smoking is vital to encourage smokers trying to quit to switch to vapes which are the most effective stop smoking aid available over the counter.”
However, smokers’ rights lobbyists criticised the Chancellor following his announcement. Simon Clark, director of the smokers’ lobby group Forest, said: “If the government is serious about advocating vaping as a substantially less harmful alternative to smoking, a levy on vaping products sends completely the wrong message to consumers.
“Vaping products are already subject to VAT. Imposing excise duty as well is a stupid, short-sighted and potentially counter-productive measure that could deter many existing smokers from switching to a reduced risk product that has helped millions of smokers to quit.”
Meanwhile, Doug Mutter, director at vape retailer VPZ, suggested that the proposed vape tax rise will penalise the most vulnerable in society and damage the UK’s 2030 Smoke Free ambitions.
He said: “Vaping is the most effective way for people to quit smoking and continues to transform the health and financial well-being of smokers throughout the country. From this perspective, it is alarming that the chancellor has announced a consultation for taxation on vaping products in today’s Budget.
“Increasing taxes on vaping will directly penalise and make products prohibitive for the most vulnerable in society at a time when many are doing their best to make positive life choices. The idea of raising tobacco duty to encourage more smokers to switch, whilst at the same time introducing a punitive vaping tax, is fundamentally flawed and will only punish people looking to quit smoking.
“There is a genuine fear that any move in this direction will further fuel the illicit black market and act as a deterrent for people looking to quit, which will hugely damage the progress we have made in reaching the UK’s 2030 Smoke Free ambitions.”
