Upcoming UK Vape Tax and Its Implications

Summary of the Upcoming UK Vape Tax and Its Implications

The UK government has announced a new vape tax of £2.20 per 10ml of e-liquid, set to take effect on October 1, 2026, as part of Chancellor Rachel Reeves' budget. This flat-rate tax will apply to all e-liquids, regardless of nicotine content, and will significantly increase vaping costs across the country. The announcement follows earlier measures, including a ban on disposable vapes starting in April 2025, as outlined in the Tobacco and Vapes Bill.

Key Impacts of the Vape Tax

1. Increased Costs for Adult Vapers

Refillable vape kits and bottles of e-liquid, often chosen by adult vapers for their cost-efficiency, will face steep price hikes. For example:

A 10ml bottle will cost over £5 due to the tax.
A 100ml shortfill will increase by £22, potentially exceeding £40 per bottle with added nicotine shots.

These price increases disproportionately affect adults trying to quit smoking, potentially deterring them from using vaping as a harm-reduction tool.

"The current proposal would see certain bottles of e-liquid double in price"

2. Youth Vaping and Environmental Concerns

The government argues that the tax, alongside the disposable vape ban, will reduce youth vaping. However, disposable vapes—the most popular choice among minors—will see only a 7% price increase, while environmentally friendlier shortfills will face a 147% cost surge. Critics argue that this undermines the tax’s stated goals and punishes responsible adult users.

3. Black Market Growth

The tax may unintentionally fuel the black market. Current enforcement measures are insufficient to address illegal vape sales, often facilitated by local shops and "American Candy Stores." Without stronger regulatory measures, minors and adults may increasingly turn to unregulated products, exacerbating public health risks.

Size & Strength	Current Average Cost (per bottle)	Cost of E-Liquid in 2026 (per bottle)	% Increase in Cost (rounded up)
10ml: Nicotine Free	£3	£5.20	73%
10ml: 0.1mg - 20mg	£3	£5.20	73%
50ml Shortfill	£13	£24	85%
100ml Shortfill	£15	£37	147%
Prefilled Pods (2 x 2ml)	£6	£6.44	7%

4. Economic Consequences

The UK vaping industry contributes £2.8 billion annually, supports 18,000 jobs, and saves the NHS over £300 million per year by reducing smoking-related illnesses. The new tax risks:

Forcing smaller vape retailers out of business due to increased wholesale costs.
Driving consumers to the black market or DIY e-liquid production, further straining regulatory resources.

"The Government must focus on addressing the root issues... This situation stems from inadequate funding to combat the illicit sale and distribution of illegal products. Claiming that revenue from this tax will be used to crack down on rogue sellers comes across as insincere."

5. Inconsistent Government Messaging

The tax conflicts with government initiatives like the "Swap to Stop" campaign, which promotes vaping as a smoking cessation tool. The vaping community views the tax as a step backward for public health progress, particularly as the industry advocates for solutions like a Vape Industry Licensing Scheme to curb illegal sales.

"The tax is more symbolic than practical and is likely to undermine the public health advancements achieved through vaping."

6. Economic Impact of the Vaping Tax Increase

The UK vaping industry plays a vital role in the economy and public health by reducing smoking rates and alleviating the associated healthcare burden.

Economic Contributions: In 2023, the vaping sector generated £2.8 billion in revenue, supporting nearly 18,000 full-time jobs. It also contributed significantly to public health savings, reducing NHS costs by £300 million in 2019 and providing £310 million in tax revenue in 2021.
Impact on Businesses: The new excise tax will be applied at the manufacturing level, creating substantial challenges for smaller vape retailers. Many may struggle to absorb the increased wholesale costs, leading to potential downsizing, reduced employee wages, or even closure. This financial pressure could severely disrupt the legitimate vaping market.
Consumer Budgets: The tax will raise the cost of vaping products, further straining consumer budgets. With vaping already a primary tool for harm reduction, higher prices might push adult vapers to seek cheaper alternatives, including black market products.
Black Market Risks: Smaller vape shops facing financial difficulties might turn to unregulated sources to stay afloat, inadvertently fueling the illicit trade of vaping products. This shift could undermine public safety and exacerbate the existing black market problem.

In summary, the tax increase risks damaging an industry that contributes to both the economy and public health while potentially driving consumers and retailers toward unregulated and unsafe alternatives.

"All vaping products, including those made at home using base ingredients like propylene glycol, vegetable glycerin, flavorings, and nicotine, will fall under the scope of the duty. The new vape tax will be applied at the manufacturing stage."

Conclusion

The new vape tax will heavily burden legitimate vapers and businesses while failing to adequately address youth vaping or black market proliferation. By making vaping less affordable, the policy risks driving adults back to smoking, increasing public health costs, and damaging a sector that has proven its value in reducing harm. A more balanced approach, focused on regulation and enforcement, is essential to achieve the government's smokefree goals without undermining adult smokers’ access to safer alternatives.

Daniel McGill | Posted on December 10 2024