Jeremy Hunt has announced plans for a tax on vaping products, along with increases in tobacco duty.
Unveiling his decision to make the nicotine liquids used in electronic vapes subject to excise duties for the first time in his UK budget speech, Hunt said tobacco duty would also increase to ensure it remains more expensive than vaping.
He 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”. The change comes into force from October 2026.
The chancellor also reiterated the government’s intention to ban disposable vapes “as soon as possible”.
In a measure campaigners said would help tackle the “pocket money” pricing that has attracted so many young children to vaping, vapes will be taxed at three rates: nicotine free, nicotine (less than 11mg of nicotine per millilitre), and high nicotine (at least 11mg per millilitre). These will be set at £1, £2, and £3 per 10ml of liquid respectively, and will be charged to UK manufacturers or importers.
The Office for Budget Responsibility, which measures the impact of the budget, said the levy would mean a product in the high nicotine category selling for £3 would double in price to more than £6. It said the tax would raise £500m by the 2028-29 financial year.
The move was welcomed by other bodies, but the government was asked to ensure that any proceeds from taxation go to tackling the environmental and public health consequences of vaping.
Kaya Comer Schwartz, the vice-chair of the Local Government Association’s community wellbeing board, said: “It is good that the government are taking decisive action to make vaping products less affordable to minors … We urge government to ensure the proceeds from the tax are specifically targeted for environmental, public health and enforcement purposes.
“This will help to tackle the pocket-money prices vapes are currently available for, deterring children from using them and helping the clampdown on illicit products.”
The Chartered Trading Standards Institute (CTSI) said it had long called for a vape tax “to help tackle the challenges posed by the illicit market in vapes”. A spokesperson said: “By treating vapes as an excise product, and a tax on sales, it means that there will be more eyes on the product itself from enforcement agencies including Border Force and HMRC and this should help us clamp down further on the illicit market in vapes.”
The government will also provide £30m of funding to support the work of enforcement agencies including trading standards from the beginning of April.
Currently, vaping products and non-tobacco nicotine are taxed at 20% VAT, with a lower 5% rate for e-cigarettes regulated as medicines. Ministers fear that the relatively cheap cost of vaping has made it increasingly appealing to young people and non-smokers.
The new tax would be similar to 15 schemes in European countries, including Germany, where a €1.60 (£1.37) tax is charged on every 10ml of vape liquid, and Italy where the rate is €1.30. The EU is also planning to impose a vaping levy across the 27-nation bloc.
