UK Vaping Tax to Be Proposed in 2024 Budget

The UK government is considering a new vaping tax to be announced at the Budget next week. Let’s break down what this means for UK vapers.

Here in the UK, vaping products are subject to VAT, but they don’t carry an added levy like tobacco products do. 

The government is looking to change that with a possible vaping tax on top of the disposable vape ban announced last month. 

They’re also looking to increase the tax on tobacco products to ensure that vaping remains the cheaper option.

Let’s break down what the government is proposing.

Why is the government introducing a Vaping Tax?
Government ministers fear that the relatively low cost of vaping is what makes vaping so accessible to children—nevermind the fact that disposable vapes are so cheap because the TPD introduced a 2ml volume limit on disposable vapes.

Your average 2ml disposable costs about £5. 

If disposable vapes were capped at, say, 10ml, this would effectively quintuple the price of a disposable without lowering the value for adult vapers. 

A 10ml disposable would cost roughly £25, which would effectively price out young people. 

Instead, the government intends to add a separate levy on vaping products (just like tobacco) in an attempt to deter minors and non-smokers from taking up the habit.

How would the Vaping Tax work?
The new vaping tax will be levied on E-Liquid, with higher tax rates on higher nicotine strengths. This will mean that vapers who use a 20mg nic salt will be paying more in tax than a vaper who uses a nicotine-free shortfill. 

Treasury analysis suggests that this new vaping tax, along with the proposed increase on tobacco tax, could raise around £500 million extra per year.

UK government officials are hopeful that they can pass the legislation before the upcoming election. The ban would likely come into effect in early 2025, with retailers given a further 6 months to adapt to the new vaping tax.

Community Response to the Proposed Vaping Tax
As you can probably gather, a vaping tax isn’t something the vaping community or industry is particularly thrilled about, especially given that our 2023 vapers survey found that 46.5% of respondents switched from smoking to vaping in order to save money.

If vaping were made less accessible, many would return to smoking cigarettes, while others would likely resort to purchasing black market vaping products to escape the levy. 

In fact, our survey asked respondents, “What would you do if the UK government banned or significantly restricted your access to vaping?” 38.8% said they’d go back to smoking cigarettes, and 34.9% said they’d find illicit ways to buy vape products. 

Only 26.4% said they’d quit vaping altogether.

Alternatives to the Vaping Tax
As mentioned above, one major alternative to the proposed vaping tax would be to increase the volume limits on nicotine-containing E-Liquids and disposable vapes (if the disposable ban doesn’t happen), which would price young people out of buying without affecting the value for adult consumers.

Another alternative is something that the UK Vaping Industry Association (UKVIA) brought forward in Parliament this week: an Industry Licensing framework that would generate over £50 million per year and would do a better job of curtailing the existing black market for vape products than the proposed measures.

Currently, anyone can sell vaping products, whether you’re a high street retailer or an entrepreneurial ice cream truck. Market stalls and phone shops can stock and sell vapes. 

And because there’s no record of who is selling vapes and where they’re being sold, it’s easy for unscrupulous sellers to operate under the radar of the grossly underfunded Trading Standards. If a disposable ban comes into effect, these retailers will be largely unaffected, while specialist vape stores (like us) will be under extra scrutiny.

In fact, Freedom of Information data reveals that 1.57 million illicit vapes were seized last year, with 95% of illegal vape sellers going unpunished.

The first-of-its-kind licensing scheme proposed by the UKVIA would require all vape retailers to be registered, which will generate enough revenue to aid Trading Standards in policing rogue retailers. The scheme would ensure only licensed retailers can sell vapes, and these retailers would be subject to strict criteria and oversight. 

To qualify for a licence on the proposed scheme, retailers would need to meet an array of criteria, including robust age verification practices, TPD compliance, adherence to advertising and environmental regulations, and more. This would ensure that only dedicated vape shops can hold a licence and sell vaping products. 

The scheme has been developed in a comprehensive six-month consultation period with tobacco control experts and leading figures from the retail and regulatory sectors, as well as Trading Standards themselves. Several MPs are in favour of the idea of licensing for the sector.

We don’t want to see an added tax on vaping products, even if it means increasing the levy on tobacco. Making vaping more expensive will only serve to deter smokers from making the switch, and may compound the existing myth that vaping is just as harmful as smoking.

As always, you have one primary option as a vaper: make your voice heard. Write to your MP. Sign a petition. Make some noise.

We sorely hope that Parliament will consider the UKVIA’s licensing scheme over the new vaping tax. Until then, we’ll keep you apprised of any updates.