Chancellor Jeremy Hunt has confirmed the introduction of a new levy on vaping products in October 2026, alongside a one-off duty increase on tobacco products.
The rates will, subject to consultation, be £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.
The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.
In response, ACS chief executive James Lowman said: “Retailers are trying to prepare for multiple changes to the regulation and taxation of the vaping category: a ban on disposables expected to come into effect in April 2025, a variety of as-yet undrafted regulations on the siting and marketing of products, and now the introduction of duty on vape sales from 2026.
“We will work with the government to try and make these various measures coherent and effective, but retailers will be feeling confused about the purpose and implementation of these regulations. Responsible retailers will also be concerned at the advantage given to illicit importers and sellers of vapes who will not pay excise duty, over legitimate businesses who will apply this tax to the price of vapes.”
Muntazir Dipoti, the National President of the NFRN, said its members were dismayed by the announcement of the vape tax. He warned that a vape levy would fuel the illicit market.
Cigarettes were a valuable commodity, he said, adding that increasing the price of cigarettes would heighten the risk of theft and retail crime.
Doug Mutter, Director at vaping retailer VPZ, said: “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.
“There is a genuine fear that any move in this direction will further fuel the illicit black market and act as a deterrent for people looking to quit, which will hugely damage the progress we have made in reaching the UK’s 2030 Smoke Free ambitions.
He added: “Rather than exploring increasing taxation, the government needs to take on board our recommendations and implement a licencing scheme where there are proper enforcement and policing in place to tackle youth uptake and the existing black market.”
Other headline measures unveiled in the Budget include:
- Alcohol duties frozen until February 2025.
- Fuel duties, including the previously announced 5% fuel duty cut, have been frozen until February 2025.
- The VAT registration threshold for businesses is to rise from £85,000 to £90,000.
- Full expensing for investment to apply to leased assets as well as owned assets.
- An increase in the child benefit threshold from £50,000 to £60,000.
Lowman added: “The National Insurance cut and increase in child benefit thresholds will help the 400,000+ people working in the convenience sector and encourage more people into work, relieving pressure on an incredibly tight labour market.
“We heard nothing from the Chancellor today on the future path of the National Living Wage, which we urge clarity on as soon as possible to help convenience retailers prepare for expected rates in 2025 and beyond.”
The full Budget documents are available here.
