Why Has the UK Government Introduced a Vape Tax?

In this article...

It's not just about the money
The numbers tell their own story
Youth vaping is the real driver here
Where did the £2.20 Vape Tax figure actually come from?
So, will it actually work?
Our take, for what it's worth

If you’ve bought e-liquid recently, you’ve probably heard something about a new vape tax coming in. From 1 October 2026, the Vaping Products Duty (VPD) kicks in, and it’s going to change how much you pay for your juice over the following 6 months. That's probably got you asking "well, why?"

It’s a fair question. Nobody likes paying more for something they already pay for, especially when vaping has helped so many people give up smoking for good. So we're going to dig into what the Government says its reasoning is, and whether that reasoning holds up.

Please note these price changes are government-mandated. Totally Wicked, like all vape companies, has no say in whether tax is applied or how much it amounts to.

It’s not just about the money

The official line from HM Treasury and HMRC is that VPD isn’t simply a cash grab dressed up as public health policy; it’s meant to do two jobs at once.

Job one: make vapes less attractive to kids and teenagers by pushing the price up.

Job two: keep vaping cheaper than smoking, so adults who’ve switched (or want to) still have a financial reason to stick with it or make the change.

To do that second bit, tobacco duty is going up alongside the vape tax. The idea is simple enough on paper: cigarettes get more expensive, vapes get a bit more expensive too, but the gap between the two stays wide enough that vaping still makes financial sense over smoking.

Whether that gap stays meaningful once you factor in everything else going up is a different conversation.

The numbers tell their own story

Here’s the bit that raises eyebrows. According to the figures published alongside Budget 2025 and signed off by the Office for Budget Responsibility, VPD is expected to bring in:

Year	Forecast Revenue
2026 – 27	£135 million
2027-28	£400 million
2028 – 29	£465 million
2029 – 30	£530 million
2030 – 31	£565 million

That’s not pocket change, and it’s easy to see why some people look at those numbers and think this is really about topping up the Treasury’s funds rather than protecting anyone’s health. It’s a reasonable bit of scepticism to have.

But the Government’s position is that both things can be true at once. Higher prices might put off a curious teenager who’s thinking about trying a disposable for the first time, while an adult who’s already smoking twenty a day still finds vaping the cheaper option by a country mile. That's hopefully the plan anyway, whether it actually is will have to be examined once the tax rolls in.

Youth vaping is the real driver here

If you want to understand why this tax exists at all, it helps to look back at the sharp rise in disposable vape use among under-18s a few years ago. It’s illegal to sell nicotine vapes to anyone underage, full stop, and that’s a line Totally Wicked takes seriously – it’s why Challenge 25 is enforced at every till, no exceptions. But the law alone hasn’t stopped usage from climbing in survey after survey, and disposables in particular took off in a way nobody in the industry quite predicted.

The good news is that the picture has settled since then. According to ASH’s Smokefree GB Youth Surveys, the proportion of 11-17 year olds who’ve ever tried vaping rose steadily from 11% in 2021 to 20% in 2023, but has held roughly steady since – 18% in 2024 and 19-20% in both 2025 and 2026. So while the numbers are still too high, the runaway growth phase does seem to be behind us.

VPD didn’t arrive on its own, though. It’s part of a wider package that already includes tighter advertising rules and restrictions on disposables. The thinking is that price is one more lever the Government can pull to make vaping less appealing to teenagers who are just experimenting, without doing much to put off an adult smoker who’s using vaping as a way out of cigarettes.

Does taxation alone fix underage vaping? Almost certainly not on its own. But combined with age verification, Challenge 25, and the rest of the package, it’s clearly seen as one piece of a much bigger strategy – and the levelling-off in the youth figures suggests that strategy is at least moving in the right direction.

Where did the £2.20 Vape Tax figure actually come from?

HM Treasury ran a consultation back in March 2024, and got 114 responses from manufacturers, retailers, public health bodies, trade groups and vapers themselves. Topics covered included how the duty should be worked out, whether nicotine strength should change the rate, how to track products through the supply chain, and the risk of pushing people toward the illicit market.

Off the back of that, the Government dropped its original idea of taxing e-liquid on a tiered basis according to nicotine strength. Instead we’ve ended up with a flat rate of £2.20 per 10ml, excluding VAT. Treasury’s reasoning is that it’s simpler for businesses to apply, cuts down on arguments over how a product should be classified, and lines up with how several other countries already tax vape liquid.

Alongside the duty itself, there’s also a new Vaping Duty Stamps Scheme being introduced, essentially a way of marking products so enforcement agencies can tell at a glance whether the duty’s actually been paid on them.

So, will it actually work?

That’s the question nobody can answer yet with any certainty.

On paper, the Government’s hoping VPD will cut youth uptake, back up the wider tobacco reduction plan, improve compliance through the duty stamps, reduce tax evasion, and still leave vaping as the cheaper choice next to smoking.

The concerns raised during consultation haven’t gone away though. There’s a real risk that higher prices push some people toward unregulated sellers, whether that’s dodgy websites or overseas retailers who couldn’t care less about UK rules.

There’s also a genuine worry that if vaping starts to feel expensive, some smokers who were on the fence about switching might just decide it isn’t worth the hassle and stick with cigarettes instead.

HMRC has said it’ll keep an eye on how things play out once there’s actual data to look at, and future reviews are expected to weigh up whether the policy’s genuinely reduced youth vaping while still supporting the “smoke-free generation” goal. Like most policy like this though, we’ll only really know how well it’s worked a few years down the line.

Our take, for what it's worth

We’re not going to pretend a tax rise is good news for anyone who vapes. It isn’t. But we do think sensible regulation that protects kids while keeping vaping accessible and affordable for adult smokers is a reasonable thing to aim for, even if the execution won’t please everyone.

Our job, as always, is to keep you informed as October approaches, cut through the jargon, and help you understand exactly what’s changing and what it means for your wallet. We’ll keep updating this as more detail comes through from HMRC.