UK’s New Vape Tax: A Misguided Policy Benefiting Big Tobacco and Punishing Ex-Smokers

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In an economically illiterate move that will no doubt have the tobacco industry jumping for joy, UK Chancellor Jeremy Hunt has announced a severe and extremely complicated tax on vaping.

Just when we hoped the government had attacked the vaping industry enough this year, Chancellor Jeremy Hunt announced a tax on vaping in his Spring Budget, and rubbed salt into the very fresh wounds.

The proposed tax is not only one of the most severe in the world (doubling the cost of vaping for many), but it’s also one of the most complicated and difficult to enforce.

Combined with the upcoming ban on disposable vapes, it would seem that this government wants to keep people smoking.

The vast majority of vapers are ex-smokers; they did what was asked of them, and quit smoking. Now the government is about to punish them for it. Maybe we were naive, but we expected far better from a former health minister!

Let’s take a look at the vaping tax proposals in more detail and outline what the impact will look like.

What is the current tax on vaping?

Currently, there is no specific tax rate on any vaping products, which means that vapes are taxed at the standard VAT rate of 20%. Medically licensed and prescribed vaping devices attract a reduced rate of 5%; however, this isn’t applicable at this time, as no vape kits have been granted a medical license.

Why is a tax on vaping being introduced?

One of the reasons cited by the Chancellor for a duty on vaping is to raise revenue to support public services. The proposed excise tax would generate £120m in 2026-7, rising to £445m by 2028-9.

Another of his reasons is to tackle the so-called ‘pocket money prices’ that attract minors to vaping and to deter non-smokers from taking up vaping in the first place.

Finally, an excise duty at the point of manufacture means, in principle, that there should be more eyes on imported products from Border Force and HMRC. If that is actually feasible with the current resource shortages across UK enforcement agencies, then it could result in more illicit vapes being seized at our borders.

When will the tax on vaping be introduced?

The plan is to introduce the new vape tax on 1st October 2026, following a lengthy consultation process.

The fact that this is over two years away (when the Conservatives aren’t even likely to be in power) tells us that this was a last-minute, un-thought-through, cynical cash grab from a government that is using the vaping culture war to desperately win support.

The proposal is ridiculously complicated and unenforceable in its current form. The consultation process will undoubtedly uncover these challenges and complexities, and we would imagine/hope that many changes will be made before it comes into effect.

How much tax will be added to vape products?

This is where it really gets ridiculous! Jeremy Hunt proposes that the nicotine content of e-liquid be the subject of the tax. The higher the nicotine content, the higher the tax. Zero nicotine e-liquids don’t escape this new taxation though, albeit at the lowest level.

Nicotine strength | Tax per 10ml of e-liquid

  • 0 mg (0%) | £1.00
  • 0.1 – 10.9 mg (0.1 – 1.09%) | £2.00
  • 11 – 20 mg (1.1 – 2%) | £3.00

Bear in mind that this excise tax is also subject to VAT, so an extra 20% will be added as well. That’s a £1.20, £2.40, or £3.60 price increase per 10ml of e-liquid!

Let’s lay out what this looks like in reality:

  • A 10ml bottle of 20mg nic salt e-liquid would more than double in price!
  • A 100ml short fill bottle of 0mg e-liquid would increase by £12!
  • A single prefilled pod containing 2ml of 20mg nic salts would increase by 72p!!

Smokefree by 2030???

This would make the UK one of the most expensive countries in the world to be a vaper. Considering we used to be seen as progressive leaders in harm-reduction, this is a massive back-step.

When you first decide to swap smoking for vaping, you need the highest nicotine strengths in order to keep the cravings at bay and have the most chance of success.

If you’re an average smoker, you’ll likely get through a 10ml bottle of high-strength e-liquid every 2-3 days. This new tax would mean that vaping would cost you an extra £60-£80 per month.

That doesn’t sound like a policy that is coming from a government insisting they want the UK to be Smokefree by 2030!

The tobacco industry would be the biggest winners

Tobacco manufacturers have net operating profits far in excess of any other business. For example, Imperial Tobacco made 70.5% profits in 2021 in the UK. Think about that for a second… that’s £70.50 of operating profit for every £100 of turnover. That’s ten times greater than the profit margin of BP, yet you rarely see it spelled out in the headlines!

With these astounding profit margins, tobacco manufacturers can more than afford to swallow a new tax on vaping, without needing to increase their prices.

Soon, we might find that only vape products made by tobacco companies will be available to consumers. If people keep vaping, they keep selling. If people switch back to smoking, they get that sale as well. They must think all their Christmases have come at once!

Summary in Very Easy Language

The UK government announced a new tax on vaping, making it very expensive and complicated. This tax will double the cost of vaping for many people and might push them back to smoking cigarettes. The tax starts in 2026 and targets the nicotine levels in e-liquids. The government says the tax will help raise money and stop kids from vaping, but it will hurt small vape shops and help big tobacco companies. Many people think this is unfair, especially for those who quit smoking by switching to vaping.

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