Government Announces Huge Vaping Tax Increase

Vape Tax Set to Rise in 2026
Rachel Reeves has announced a major hike in vape tax – a move that will seriously hurt the pockets of roughly 5.6 million vapers across the UK.

From October 2026, consumers will be taxed £2.20 for every 10ml of e-liquid that they buy.

The decision comes amidst the increasing vilification of vapers and a year of major uncertainty for the future of the vaping community as a whole.

The Spring Budget earlier this year – laid out by the previous Conservative government – put forward the Tobacco and Vapes Bill, which proposed banning disposables, restricting vape flavours, and increasing taxes on vaping products.

Now, in the 2024 Autumn Budget, Labour has doubled down on the restrictive policies of the former administration rather than embracing real, progressive change.

The news has been a real kick in the teeth for vapers nationwide. So why are vape taxes being increased? How will the changes impact your finances? And which products will be affected?

Why Are Vape Taxes Being Increased?
The government’s reasoning for increasing vape taxes is two-fold.

According to the official consultation set up by the last Conservative government, the tax would be used to make vaping “less accessible to young people and non-smokers while also raising revenue for vital public services like the NHS.”

However, it is unlikely these so-called ‘sin taxes’ will have the desired effect.

The majority of child vaping is led by illegal disposable vape sales, which are due to be banned in 2025, meaning they’ll be completely unaffected by the proposed 2026 tax increase.

Instead, prefilled and refillable kits will be hit by the increase – devices used by adult ex-smokers trying to embrace a healthier, smoke-free future.

How Much Is Vape Tax Increasing?
Currently, vaping products are subjected to the standard 20% VAT rate. This is a fair amount which allows the vaping industry – worth £2.8bn – to support the UK economy.

However, this is soon to be a thing of the past.

Rachel Reeves has introduced a flat rate tax of £2.20 per 10ml of e-liquid, a cost that will be picked up by consumers.

This may not sound like much at first, but let’s take a step back to consider the actual day-to-day financial impact.

A 10ml e-liquid bottle will only see a £2.20 increase, so this means that a small vape juice will now cost around £3 to £5. Not too bad right?

Unfortunately, the price soon stacks up. A shortfill e-liquid contains 120ml of juice, which means you’ll be taxed twelve times that amount. Yes, that means you’ll be taxed £26.40 for every bottle of shortfill e-liquid you buy.

In the not-too-distant future, a standard shortfill bottle could set you back as much as £40. That’s a 147% increase!

And vape juice manufacturers like ourselves will be totally powerless to lower the prices.

All e-liquids will be affected, whether they contain nicotine or not. If you enjoy vaping, you can expect these taxes to soon start burning a burdensome hole in your pocket.

Will DIY E-Liquids Be Affected by the Vape Tax?
We know what you’re thinking – if e-liquid prices are going to skyrocket, surely I can just get around it by making them myself?

Well, we had the same thought, so we’ve done a little digging.

Responding to questions regarding DIY e-liquid and the new vaping duty tax, the UK government consultation stated:

“All vaping products will be within the scope of the duty, including those produced at home from base ingredients, such as propylene glycol, vegetable glycerin, flavourings, and nicotine. The new vape tax would be implemented at the point of manufacture.”

Let’s unpack this.

Based on this response, the government’s current position seems to be that DIY e-liquids will be largely unaffected by the increase. The tax is implemented at the point of manufacture, and the taxman is unlikely to deliver a bill to your garage when you whip up a batch of e-liquid in your garage.

While that does sound promising, it does appear the government are aware of this taxation blindspot. They stress that all ingredients are ‘within the scope of the duty’, so they may turn to taxing the individual components.

Still, though, it’s very unlikely that they’ll raise the tax on vegetable glycerine and propylene glycol, as these are used in a variety of food and cleaning products.

Instead, the increase will only apply to nicotine shots, so most of your e-liquid will avoid the taxation.

That means that soon, the UK vaping market may become much like the German vaping market, where longfills and DIY e-liquids reign supreme.

Will CBD E-Liquids Be Affected By the Vape Tax?
Unfortunately, yes. CBD e-liquids will be affected by the 2026 vape tax.

The previous Conservative government proposed different levels of tax based on the nicotine content in the e-liquid.

However, Chancellor Reeves has scrapped this idea, instead opting for a flat rate that will simply tax consumers based on the volume of e-liquid.

That means that you will also be taxed £2.20 for every 10ml of CBD e-liquid you purchase – despite it being 100% nicotine-free.

This is a fairly shocking move, as vaping is the most effective way to administer CBD, offering the best absorption rate of any product on the market.

Millions of users take CBD to help soothe anxiety, relieve pain, and fight inflammation. Now, they face the difficult choice of paying more money or going without.

For those with low incomes and chronic pain and anxiety issues, this change could be a significant blow to their daily well-being.

Will Taxing Vapes Work?
It’s hard to argue with the aims of the tax increase: to tackle the rise in youth vaping and give money to the underfunded NHS. Who wouldn’t want to do that?

Unfortunately, however, the real-world execution leaves much to be desired. Let’s explore why.

Youth Vaping
As we mentioned previously, illicit disposable vape sales are widely acknowledged to be the root cause behind the rise in underage vaping.

According to the government’s own research, 69% of vapers aged 11-17 use disposable vapes to consume nicotine – not refillable kits and e-liquid.

The government has already announced a ban on disposable vapes, which will go into effect on the 1st of June 2025.

However, the government still wishes to raise the tax on e-liquids, a move that will do nothing but burden adult ex-smokers with additional costs.

If the UK is serious about tackling underage vaping, we need a new approach.

Banning disposable vapes may not have the effect many ministers hope it will, as the majority of underage vaping is driven by illegal black market sales. Over 4 million illegal disposable vapes were seized at the border in 2023, with numbers rising year-on-year.

Putting a ban into place will do little to discourage these disreputable brick-and-mortar stores, which already don’t care about the rules; in fact, it is likely to increase demand for black market goods, creating further sales and profits.

Instead, implementing a licencing scheme to encourage responsible selling would be much more effective.

All shops are required by law to be fully licenced to sell products like alcohol. However, you currently don’t need any licence to sell vaping products.

According to UKVIA, requiring shops to carry a vaping licence by law would be a massive blow to rogue traders, while earning the government an extra £50 million a year.

This money could be put towards supporting the currently underfunded Trading Standards Institute, helping to get another step closer to fully responsible vape sales.

Funding the NHS
Rachel Reeves has stressed that this taxation will be taking away money from a supposedly damaging industry and redirecting it to the backbone of the UK’s well-being: our NHS.

This sounds great, but scratch just beneath the surface, and you’ll recognise that the reality is quite different.

The government expects the tax will raise around £120 million a year for the NHS – a number not to be sniffed at.

However, supporting vaping could save the NHS much, much more. Smoking takes millions of lives every year and costs the NHS around £12.6 billion annually.

Vaping is 95% less harmful than smoking – as it doesn’t produce the toxic chemicals or tar of cigarettes – so if more people were to switch, it could save the NHS lots of money.

A recent study found that if just 50% of UK smokers were to transition to vaping, it would reduce hospital admissions by 13% while saving the NHS £518 million a year.

That’s £398 million more than the new taxation can raise!

At the same time, increasing the cost of vapes will encourage many ex-smokers to return to cigarettes, placing additional financial burden on the NHS.

It’s no wonder, then, that the NHS itself recommends vaping as a quit-smoking tool. Vaping saves the NHS money and saves lives – so why would the government undermine it?