Vape industry concerned over chancellor’s vaping excise duty proposal

Vape industry bodies have raised concerns over chancellor Rachel Reeves’ budget announcement introducing a flat-rate excise duty on vaping products, saying it could hurt public health and increase financial pressures on consumers.

The new excise tax, set to begin on October 1, 2026, will add £2.20 per 10ml of vaping liquid, with additional VAT. This rate replaces the previous government’s proposed tiered tax structure, which many in the industry had criticised.

The Independent British Vape Trade Association (IBVTA) welcomed the shift from a tiered structure but voiced strong concerns about the overall impact on vapers, particularly those on lower incomes.

“The government has already proposed regulation that will ban single use products, which despite helping many adult smokers access vaping, have via irresponsible retailers been disproportionately accessible to children,” said IBVTA chair Marcus Saxton.

“It would seem a little questionable then to increase the cost of vaping, especially given there are still around six million adult smokers for who you’re trying to give every opportunity to make the transition to less harmful products.”

Saxton warned that higher costs could hinder the progress made by public services utilising vapes within their smoking cessation services, adding, “The IBVTA do not believe that any excise tax should be applied to products supplied via these services.”

The UK Vaping Industry Association (UKVIA) voiced even sharper criticism, highlighting the potential for the new excise tax to become an economic burden on adult vapers.

John Dunne, UKVIA’s director general, noted that the additional £2.64 per 10ml of e-liquid (inclusive of VAT) could result in a 267 per cent price hike for some e-liquids, a change that he described as “a kick in the teeth for former adult smokers who have switched to vaping to quit their habits.”

Dunne cautioned that the new excise rate would be “the highest in Europe,” and warned that it could deter adult smokers from considering vapes as a smoking cessation tool.

“Some 3 million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS millions of pounds in treating patients with smoking related conditions. This announcement today deters adult smokers from considering vapes as a method to give up their habits, and hits the lowest paid,” said Dunne.

He criticised the government’s approach, calling it a “revenue grab from former smokers” and noted the inconsistency with reduced VAT rates applied to other nicotine replacement therapies.

“It would also make more sense for vapes to be taxed at a lower VAT rate, which is the case for other nicotine replacement therapies, which have proven to be considerably less successful than vapes in helping smokers quit,” he said.

The budget also announced a consultation on new compliance measures, including vaping duty stamps and supply chain controls to combat illicit production of nicotine products. This consultation, open until December 11, 2024, aims to limit illegal manufacturing while ensuring the new duty’s effective enforcement.