Vaping Products Duty: What we know so far about the Vape Tax

Vape Tax on E-Cigarette Products

In this year’s Budget on 6th March 2024, the Chancellor Jeremy Hunt announced that the UK government is introducing a new Vaping Products Duty that will be introduced from October 2026. Currently vapes are taxed at the standard 20% rate of VAT, but by increasing duty, the government’s plan is intended to discourage young people and non-smokers from vaping.

What it means for you?

Right now nothing. If there are no amendments to the consultation, from 1st October 2026, the price of nicotine-free e-liquids, and nicotine-containing e-liquids used in electronic cigarettes will be increasing.

The governments consultation also includes a Tobacco Duty, increasing the cost of cigarettes to ensure smoking remains more expensive than vaping. By raising the cost of tobacco cigarettes there remains a financial incentive to switch away from smoking.

Jeremy Hunt said… “e-cigarettes can also play a positive role in helping people quit smoking”, which is why there would also be a “one-off increase in tobacco duty”. Hunt added that he wanted to “maintain a financial incentive to choose vaping over smoking”.

How will vapes be taxed from October 2026?

The government are introducing new vape tax levels for e-liquids from 1st October 2026. Taxation levels for vape juice will be implemented across three distinct vape juice tax brackets:

Nicotine Free E-Liquids (0mg)

• Taxed at £1 per 10ml (in addition to the cost of the product). Approx. 2.4% of the current total duty on the equivalent quantity of a typical cigarette.

0.1mg-10.9mg E-Liquids (nicotine per ml)

• Taxed at £2 per 10ml (in addition to the cost of the product). Roughly 4.7% of the current total duty on the equivalent quantity of a typical cigarette.

11mg or more (nicotine per ml)

• Taxed at £3 per 10ml (in addition to the cost of the product). Roughly 7.1% of the current total duty on the equivalent quantity of a typical cigarette.

How will tobacco be taxed from October 2026?

A one-off tobacco duty will be introduced with an increase of £2 per 100 cigarettes or 50grams of tobacco.

Why are they taxing vapes?

The government has considered the views of public health experts and have concluded that vaping is not risk free, and could lead young people who have never smoked into a future of harm and addiction.

By raising the cost of vapes and introducing vape juice tax brackets, the government said it will tackle the “pocket money” pricing that has attracted them to vaping.

Research carried out in 2023 found that the price of vaping products influences levels of consumption and the public would vape less if the cost was more expensive.

“Overall, 62% of current vapers said that they would decrease the amount they vaped if prices were to double and 33% that it would stay the same.”

What are the objectives of introducing a vape product duty?

• Raise £500m by the 2028-29 financial year
• Reduce the number of non-smokers and young people from taking up vaping, by making vapes less affordable
• Encourage vapers to use lower nicotine strengths, and nicotine-free vapes
• Encourage e-liquid manufacturers to lower nicotine content in their products
• Raise revenue to fund services like the NHS and smoking initiatives supporting a smokefree generation
• To ensure the introduction doesn’t make smoking more appealing

Will disposable vapes be banned?

Along with taxation categories for e-liquid, The Chancellor announced the government’s plan to ban disposable vapes “as soon as possible”. The intention of the disposable vape ban is to discourage young people and non-smokers from vaping. As they appeal to children, as well as the environmental harms including battery and plastic waste.

Adults who currently vape disposables, will be encouraged to switch to refillable vapes in a response to the ban.

What other countries have introduced taxes on vape products?

• Italy
• Slovenia
• Sweden
• Denmark
• Norway
• Canada
• Georgia USA
• Virginia USA

What other countries have banned disposable vapes?

A similar approach, restricting the sale of disposable vapes has been taken in other countries including Australia, Germany, France and Ireland to help discourage the youth from vaping. Canada has prohibited visible product display and the advertising of vapes in (non-vape store) retail locations. Denmark and Finland have introduced standardised packaging whilst banning all flavoured e-liquids.