What Does a Vape Tax Mean for Vapers?

As part of the 2024 Spring budget, the UK Government announced the introduction of a Vaping Products Duty commencing 1^st October 2026. This duty is being referred to by many as a vape tax.

This announcement follows the Government's plans to ban disposable vapes.

By introducing a Vape Products Duty, the Government would be forcing manufacturers to increase their prices . Although the increase is intended to deter underage vapers, this hefty price hike could well put vapes out of the price range of many adult vapers.

Let's look at the details of this tax, why it's being introduced, and the potential impact of increased e-liquid prices on those switching from smoking to vaping.

What are the Objectives of the Vape Products Duty?

The Vape Products Duty will be an excise duty which means vapes will be introduced to an excise category that includes tobacco and alcohol. Products in this category are classed as "higher risk" and therefore require "greater control within the tax system".

The consultation document states that the main objectives of introducing an excise on vapes are to:

These documents also state that cigarettes will also see a price increase so that the vape duty and subsequent rise in the cost of vapes doesn't "make smoking more attractive".

How Much is the Vape Tax?

The vaping duty proposal for e-liquids and vaping products, including pre-filled pods, is organised into tiered rates as follows:

The Government states that this pricing is in line with pricing structures introduced by other countries who have used nicotine strengths to determine the tiers. They are keen to point out, however, that the UK's rates are "more progressive" in that they propose a lower tax rate for lower strength products. This will be of minimal comfort to those switching from smoking to vaping who feel they require higher nicotine strengths to retain their smoke-free status.

Are e-cigarette kits and devices being taxed?

Although e-cig kits aren't currently included in the Vaping Product Duty proposals, The Government hasn't ruled out a tax on such devices, saying,

"...The announced ban on disposable vapes means that we currently do not believe a duty on devices is necessary. We will continue to monitor the market in case this decision should be revisited in the future."

The Independent British Vape Trade Association's Response to the Tax

The IBVTA was founded by a selection of the UK's leading independent manufacturers, importers, distributors, and vendors. It is a non-for-profit, non-political trade association which was established to represent responsible and ethical independent vaping businesses in the UK. As such, they have a unique insight into the importance of vaping as a public health tool. The IBVTA[i] has expressed multiple concerns regarding the proposed tax on vapes:

Totally Wicked's CEO, and IBVTA Chair, Marcus Saxton has his say

"The Government has already proposed regulations that will ban single use products, which despite helping many adult smokers access vaping, have, via irresponsible retailers, been disproportionately accessible to children.

It would seem a little questionable then to increase the cost of vaping, especially for the higher strength liquids which many smokers need to make the switch, when you've still got around six million adult smokers for who you're trying to give every opportunity to make the transition to less harmful products.

There's also the potential negative effect of an excise on public services utilising vapes within their smoking cessation services. The IBVTA do not believe that any excise tax should be applied to products supplied via these services.

The IBVTA will be carefully considering the consultation announced today and we look forward to working constructively with HMRC to make sure these proposals are meaningfully enforceable and don't have unintended consequences."

Vaping Products Duty Consultation – Have Your Say

The vape tax proposal follows the announcement of a ban on disposable vapes and its purported intention is to be an additional deterrent for underage vaping.

Although the vape tax was announced in March, the proposals still needs to be discussed via a consultation[ii]. The consultation is open for 12 weeks, starting on 6 March 2024 and ending on 29 May 2024.

According to the published Government consultation document, the consultation is open to:

"Individuals or organisations interested in the policy scope and who feel they may be affected by the duty or have a particular interest in the vaping industry should read and consider responding to the consultation."

This means that you have the opportunity to make your views clear on a tax on vapes.

You can make your views and concerns known about the consultation by emailing [email protected]. You can also do so by writing to, Vaping Policy Team, Fourth Floor East, Trinity Bridge House, 2 Dearmans Place, Salford, M3 5BS.

You can also download, complete, and return a vape products duty consultation response form.

References:

[i] https://www.ibvta.org.uk/media-centre/ibvta-statement-on-todays-budget-announcement-of-a-duty-on-liquids/

[ii] https://assets.publishing.service.gov.uk/media/65e80ba108eef600115a5621/Vaping_Products_Duty_Consultation.pdf