A new Vaping Products Duty comes into force across Britain on October 1, 2026, imposing a flat tax rate of £2.20 per 10ml on all e-cigarette liquids. With 20 per cent Value Added Tax applied on top, the total charge will reach £2.64 per 10ml of liquid.
The UK Vaping Industry Association warned that the new tax could cause the cost of some vaping products to increase by up to 264 per cent over time. The levy applies to all vaping liquids regardless of nicotine strength, including nicotine-free products and pre-filled vaping items.
HM Treasury, the United Kingdom government department responsible for public finance and taxation, estimates the duty is on course to raise about £550 million annually by the 2030 to 2031 financial year. Value Added Tax, known as VAT, is standard across British retail sales and is levied on the duty amount.
Former chancellor Rachel Reeves announced the measure during the 2024 autumn Budget alongside tax increases on traditional tobacco. At the time, Reeves stated that tobacco duty would rise by an equivalent £2.20 per 100 cigarettes to maintain the financial incentive to switch from tobacco to vaping.
The tax forms part of a wider government strategy aimed at curbing youth vaping by addressing the price of vapes so that they are no longer at pocket money prices. The 2024 autumn Budget also introduced immediate above-inflation hikes of 2 per cent on tobacco and 10 per cent for hand-rolled tobacco. The previous Conservative administration had planned to introduce a vaping tax in its last Budget before losing an election and set up a consultation on the changes.
Vaping duty rates and price impact
Industry calculations indicate substantial cost increases for regular vapers. Shane Margereson, owner of online vape shop Ecigone, explained how the tax impacts specific product types.
Margereson said: "A 10ml nicotine salt roughly doubles in cost, and a 100ml short-fill picks up £26.40."
He added: "We went through our own order data for almost 18,000 customers, and the typical vaper gets through between 5.7 and 10.3ml a day, which means £549 to £993 a year in duty and VAT."
According to the UK Vaping Industry Association, the largest price increases will be seen on lower-cost products, which are typically used by lower-income vapers. Research by the UKVIA also found that average reported weekly e-liquid consumption was 24ml, which is more than twice the 11.9ml estimate used by HM Revenue and Customs in its modelling for the duty.
Implementation timeline and compliance rules
Retailers expect the financial impact on vapers will not land all at once on launch day. Margereson said: "For vapers it won't all land on October 1. Shops can keep selling stock bought before October at pre-duty prices until the end of March 2027, so prices will step up gradually over the winter rather than jumping overnight, and the popular flavours will sell through first."
Under the new rules, vaping products manufactured in, or imported into, the UK on or after October 1, 2026, must carry a duty stamp. From April 1, 2027, the retail packaging of all vaping products sold or supplied in the UK must carry a valid vaping duty stamp. Businesses that do not comply with the new rules may face civil or criminal sanctions.
Retailers and manufacturers also face broader operational overheads. Margereson said: "The duty is charged per millilitre, so it punishes volume, and the vapers who get through the most liquid will feel it most."
He added: "For the trade, the duty isn't the only new cost. Manufacturers have to buy machinery to apply duty stamps and they need bonded warehousing, with extra compliance and admin on top, and all of that lands on the shelf in the end."
Margereson added: "The industry will take the hit and adjust, because it always has."
Vaper awareness and health warnings
Consumer reaction to the incoming duty includes strong pushback. One anonymous vaper told This is Money: "I'm going back to smoking."
Margereson said: "It's a sin tax on the thing that gets people off the actual sin."
A survey of nearly 3,500 adults who vape to quit or stay off cigarettes, conducted by the UKVIA, found that more than half had no idea the new duty was being introduced. Nearly 60 per cent said they did not know the duty would also apply to nicotine-free products.
The UKVIA is warning that the government's vaping products duty could see up to half of those who used to smoke tobacco return to it. In its recent survey, the UKVIA found that half of respondents said they would return to smoking or turn to the black market once the duty comes into force, equivalent to around 2.5 million adults based on the UK vaping population.
Only one in ten said their vaping habits would be unaffected, and about two thirds said they believed the duty would reduce the number of adult smokers making the switch to vaping. Around two thirds of people surveyed said they believed the duty would have little or no effect on youth vaping, while more than 90 per cent of people surveyed said the duty would increase the black market.
Almost 70 per cent said they wanted the duty completely scrapped, while one in five said they wanted it introduced at a lower rate.
Industry response and enforcement calls
Vape industry leaders have urged ministers to consider the wider public health consequences. Dan Marchant, director of Vape Club, said: "We know we are unlikely to see the duty disappear altogether, but the cost of getting this wrong is simply too high to bear, both for the NHS and for people across the country who rely on vaping to stay away from cigarettes."
John Dunne, director general of the UKVIA, told This is Money: "The immediate impact of the Vaping Products Duty will be to make vaping significantly more expensive for millions of adults, including people who have switched completely away from cigarettes."
Dunne added: "There is absolutely no debate that we need to prevent young people from accessing vaping products, and it's not that the industry is flatly opposed to a duty increase, but the incoming rate is nothing short of a public health timebomb."
Dieno George, chairman of One Pound Liquid, said: "We recognise that the duty is here to stay, and responsible retailers have spent months preparing for it."
George added: "What we want is a commitment to review its effect on smoking rates and the illicit market, a freeze on the rate so it is not raised further, and proper funding for enforcement."
This is Money contacted HM Revenue and Customs for comment.
