Russ WareVaping in the UK is set to get more expensive as the Government confirms its plan for a tax on e-liquids in the Spring Budget. Chancellor Jeremy Hunt shared details of the new tax, which will follow Prime Minister Rishi Sunak’s complete ban on disposables in 2025, in his budget speech given on March 6th, 2024.
While the announcement has been met with approval by anti-vape campaigners who say it will lessen the “pocket money pricing” appeal of vaping to young people, this will likely feel like another hard blow to the efforts of the millions of British adults trying to use vaping to quit smoking.
UK Manufacturers and importers of e-liquids will both be subject to the taxation, which will come into force in October 2026. While e-cigarette products are already subject to 20% VAT (or 5% for vapes regulated as medicine,) this will be the first time excise duty has been applied to e-liquid. The new duty will be applied to all vape liquids, even those that contain zero nicotine. The proposed rates are:
- £1.00 per 10ml for nicotine-free liquids,
- £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and
- £3.00 per 10ml on liquids that contain 11mg or more per ml.
E-liquid is relatively cheap in the UK, especially compared to many other European countries, so it is unlikely that retailers will be willing or able to absorb these extra costs. The Office for Budget Responsibility, the department that measures the impact of budgetary changes has stated:
“A vaping product that falls within the highest nicotine category and currently retailing at £3.00 (for 10 millilitres of e-liquid) will be subject to a £3.00 rate of duty (in 2026-27), raising its post-tax price to £6.60 (since we assume all of the duty will be passed through to consumers). We estimate vaping duty will raise £0.5 billion by 2028-29.”
As expected, there will also be a one-off rise in excise duty on tobacco products. This will increase the price of 100 cigarettes or 50 grams of tobacco by £2.00. Mr. Hunt, stating that he wanted to maintain a financial incentive to choose vaping over smoking, admitted:
“[e-cigarettes] can also play a positive role in helping people quit smoking,” which is why there would also be a “one-off increase in tobacco duty.”
Although the new vape tax will likely be an unwelcome extra expense for vapers and vape retailers alike, it will bring the UK in line with several other European countries that already specifically tax e-liquids. These include Germany and Italy, where taxes of between €1.30 and €1.60 are charged per 10ml of liquid.
Reaction to the New Vape Tax
News of the vaping tax has largely been met with approval by tobacco harm reduction groups and anti-vaping campaigners, although there are calls for assurances that the extra revenue raised will be directly used to counter the environmental, health, and enforcement costs of vaping.
Deborah Arnott, chief executive of Action on Smoking and Health, said:
“Putting excise duty on vapes gives much needed additional powers to Border Force and HMRC to stop the import of illegal vapes which are flooding the market and need to be brought under control. These are powers they already have for tobacco which helped reduce the consumption of illegal cigarettes by 80% between 2000 and 2021.”
However, Christopher Snowdon, head of lifestyle economics at think tank the Institute of Economic Affairs, said the new tax is:
“a deeply cynical cash grab from the Chancellor. Forget sin taxes – this is a saint tax. Vapers did what the Government wanted and gave up smoking. They are now being punished for it. This is scientifically and economically illiterate. Combined with the ban on disposable vapes, it seems the Government is intent on keeping people smoking.”
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