Retailers are to be hit with a new tax on vaping products, in the latest efforts by the government to tackle youth vaping.

Chancellor Jeremy Hunt made the announcement yesterday, during the spring budget. He confirmed a 12-week consultation on the on the levy has launched, and registrations for the duty will open on 1 April 2026.

Hunt also revealed that a one-off duty increase for tobacco, an additional 20p per 5g of tobacco or cigarettes, will also be introduced, to maintain the “financial incentive” to choose vaping over smoking.

The e-liquid tax will consist of three rates. This include rates for nicotine-free products, nicotine (less than 11mg/ml), and high nicotine (at least 11mg/ml). These will add £1, £2 or £3 respectively to every 10ml of e-liquid sold.

The government claims excise tax on vaping will raise £120m in 2026-7 rising to £445m by 2028-9, while the additional tobacco duty will raise a further £110m in 2026-7 and £170m in 2027-8 and in 2028-9.

The news follows the England and Wales ban proposed by the UK government in January this year, followed by the Scotland ban announced in February. Retailers could lose thousands of pounds due to the move.

Speaking to Better Retailing, Avtar ‘Sid’ Sidhu, of St John’s Budgens, Kenilworth, Warwickshire, said: “The vape tax isn’t going up until 2026, it’s too far away to have any impact at the moment. The government has acted sensibly. I knew this was coming, but a lot of retailers may feel this has hit them in the dark. It’s a measured approach by the government to make sure the overall objective is getting people off a harmful product, and by keeping the duty up until 2026 people slowly migrate to reduced-risk products. By the 2026 cigarettes may be £20-plus.”

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Industry reactions

The director of World Vapers’ Alliance, Michael Landl,  said the new tax is a “huge step backwards” and risks growth of the illicit vape market.

He added: “Higher prices for less harmful vapes are placing the lives of millions of former smokers and current vapers in jeopardy. The cost is a high determinant for switching to less harmful options and this will only make alternative products less affordable. It’s illogical to discuss reducing taxes for individuals while simultaneously raising taxes on smoking cessation aids. Just last year, the UK government took a pioneering step in harm reduction policy by introducing the innovative ‘swap to stop’ program.”

 Evapo CEO, Andrej Kuttruf, said the tax is “misguided” and will “stall, if not reverse, the UK’s declining smoking rates”.  

“The true winners from today’s budget are criminals that supply the illicit market for vaping in the UK. The tax increase will only pour petrol on the flames of the already flourishing black market and hurt legitimate retailers that follow the rules.

“Evapo believes the best way to stop the criminals that sell vapes illegally is by introducing a common sense, evidence-based licensing regime, as was launched at a Parliament last month.”

Doug Mutter, director at VPZ, said: “From this perspective it is alarming that the chancellor has announced a consultation for taxation on vaping products in today’s Budget.   

“Increasing taxes on vaping will directly penalise and make products prohibitive for the most vulnerable in society at a time when many are doing their best to make positive life choices.   

“The idea of raising tobacco duty to encourage more smokers to switch, whilst at the same time introducing a punitive vaping tax, is fundamentally flawed and will only punish people looking to quit smoking.”

Deborah Arnott, chief executive of Action on Smoking and Health, said the duty would give “much-needed additional powers” to Border Force and HMRC to stop the import of illegal vapes from flooding the martket.

She continued: “These are powers they already have for tobacco which helped reduce the consumption of illegal cigarettes by 80% between 2000 and 2021. The additional increase in tobacco taxes is welcome, as keeping vaping cheaper than smoking is vital to encourage smokers trying to quit to switch to vapes. However, it’s smokers and those trying to quit and stay quit who will be paying these extra taxes. However, these new taxes should be used to plug the cuts in prevention measures and help the government achieve its smokefree 2030 ambition.”