UK Vape Tax: What It Means for Vapers

In a move welcomed by the tobacco industry, UK chancellor Jeremy Hunt has announced a planned ‘vape levy’. 

The proposals look to be some of the most severe and complicated in the world, and will (at least) double the cost of vaping for many.

In this post, we’ll take a look at what’s planned, what the likely impact will be and what will happen next. 

When will the vape tax be introduced?
Hunt has told us that the vape tax will be introduced on 1st October 2026 following a consultation. This length of time suggests some of the challenges and complexities faced in dealing with vaping - a challenge that this government may well be grateful to shunt onto a future Labour administration. 

What will be taxed?
Current proposals are to tax the nicotine in e-liquid, although zero nicotine e-liquid will also be taxed. The higher the nicotine, the higher the tax:

The average price of a bottle of 10ml e-liquid would change as follows: 

·18mg: From £3 to £6
·10mg: From £3 to £5
·0mg: From £3 to £4

A prefilled pod with over 10mg of nicotine would increase in price by 60p, while a 100ml shortfill would increase in price by £10.

The results would make the UK one of the most expensive countries in the world for vaping, with only four other countries charging a higher tax for higher-strength e-liquids. 

In contrast, the tax on cigarettes is increasing by £2 per hundred cigarettes and per 50 grams of tobacco. That equates to an extra 2p per cigarette.

What else do I need to know?
If you’re a business, you’ll need to understand that the tax is paid when goods are imported or manufactured, not when they are sold. This will require a huge investment by those vape businesses able to do so. 

What will the vaping tax mean?

Smoking and vaping rates
When asked about the introduction of vaping taxes, British American Tobacco (BAT) chief executive Tadeu Marroco said: 

“I think that could be a good idea, I think that we need more regulation”.

That gives a clue to the likely impact on smoking rates. In other countries where taxes have been put in place, the results have led to an increase in smoking and a decrease in vaping. 

When a vape tax was applied to Italy, it led to a 70% decrease in the number of vapers, and an increase in the use of illegal and imported e-liquid The number of vape shops also fell from 4000 to 1000, costing approximately 10,000 retail jobs.

Research in the USA found that a $1 tax leads to a significant decrease in vaping rates and an increase in smoking rates. (Source: Friedman and Pesko, 2022). A separate study, also by Pesko, found that vape taxes also increase smoking in pregnant women by 6%. (Source: Georgia State University, 2019).

The government hopes that keeping a differential between the price of cigarettes and vape products will deter people from reverting to smoking. However, research by Professor Notley found many young people who smoke do so using illegal tobacco, and already find it cheaper than vaping. 

Black market sales
According to Trading Standards, the black market already accounts for one third of vapes sold in the UK. Tests have found that black market products are significantly more harmful than legal vapes. 

There’s little research into the effect of specific vape taxes on the black market. However, restrictions in Australia, where vapers are forced to have a prescription in order to vape, have meant an estimated 90%+ of vapers now buy vapes illegally. 

Effect on competition
The impact on smaller businesses will not just be increased tax and reduced demand - it’s also the complexity of dealing with regulations, and the need to pay the tax before goods are sold. 

This is likely to lead to reduced competition in the market, reducing choice and potentially further increasing costs - in effect, exactly what’s happened in the tobacco industry.

What happens next (and what can vapers do)?
The government is holding a consultation for individuals, organisations and businesses. It’s crucial that we respond. 

Let’s also remember the numerous serious threats to vaping, including coming weeks away from a ban in the UK in 2012. Vigorous protest has led to compromises that may not have been ideal but have enabled millions of smokers to switch to vaping. 

Once again, there are likely to be protests, including petitions (although letter writing is more effective).

To have any chance of getting a more reasonable tax regime, whether that's with the current government or, more likely, a new Labour government, it’s also key to support organisations like the New Nicotine Alliance (for consumers) and the Independent British Vape Trade Association  (for businesses).