The Chancellor has announced a new excise duty on vaping products, which will come into force from October 2026, in today’s budget.
The policy is intended “to discourage non-smokers to take up vaping”, Jeremy Hunt said in his budget speech.
At present, vaping products are subject to VAT, but not additionally subject to a dedicated levy, like tobacco products.
It is understood the new duty will be levied on the liquid in vapes, with higher tax rates for products with more nicotine. The government will soon publish a consultation on its design.
At the same time, there would be a one-off increase in tobacco duty, Hunt said, “to maintain the financial incentive to choose vaping over smoking”.
The UK Vaping Industry Association (UKVIA) said there was “no sense in making it more difficult for adults to stop smoking by essentially penalising those who want to use a proven less harmful alternative”.
“Surely we should be doing everything we can to help smokers escape a habit that kills so many,” said UKVIA director general John Dunne. “Increasing taxes on vaping will make vapes less accessible for the most disadvantaged in society who have the highest smoking rates and are most in need of an effective tool to quit.”
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The likely increased price of vapes resulting from the move would mean “consumers will be more incentivised to turn to the black market” and would further “fuel a black market which is already in danger of being out of control”, he added.
The Institute of Economic Affairs said the levy was further evidence of the government’s approach to vaping becoming “an incoherent mess”.
“It says it wants to clamp down on disposable vapes and yet it is going to tax refillable e-cigarette liquid,” said Christopher Snowdon, head of lifestyle economics at the IEA. “It is giving away e-cigarettes for free with its Swap to Stop scheme while making vaping less affordable for those who are prepared to pay. It says it wants to lower the tax burden but seems happy to tax smoking cessation.
“When you have two substitute products, discouraging the use of one amounts to encouraging the use of the other. Anti-vaping policies are essentially pro-smoking policies,” Snowdon added.
The possibility of duty on vapes was raised in last year’s King’s Speech, and would be part of “action on the affordability of vapes”, the government said. It added it would be “ensuring that there is a significant differential between duty on vapes and tobacco products”.
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