London, England – The government is considering introducing a new tax on vaping products at the upcoming Budget announcement next week. Currently, vaping items are subject to VAT, but unlike tobacco, they are not additionally taxed. The potential increase in tobacco duty is being considered to maintain a price gap that keeps vaping cheaper.
Ministers express concern that the affordability of vaping products makes them more accessible to young people and non-smokers. The idea of a vaping levy was first mentioned in November’s King’s Speech, highlighting a significant tax difference between vaping and tobacco products. Reports indicate that the proposed duty would apply to the liquid in vapes, with varying tax rates based on nicotine content.
It is estimated that the new vaping tax, combined with increased tobacco duty, could generate about £500 million annually, according to Treasury analysis. Last year, the tax on tobacco products rose by 2% more than inflation as part of the Autumn Statement. Vaping products and non-tobacco nicotine are currently taxed at 20% VAT, with a lower 5% rate for e-cigarettes classified as medicines.
In England, the government operates a “swap to stop” scheme, offering free vaping starter packs to traditional smokers looking to quit tobacco. The NHS recommends nicotine vaping as a less harmful alternative to tobacco, although not entirely risk-free. Several European countries already have e-cigarette taxes, with plans for a minimum level of taxation across the European Union.
Plans were recently announced for a UK-wide ban on disposable vapes, with stricter regulations on flavors and packaging. The ban is expected to take effect in early 2025 with the intention of curbing underage vaping. The government also aims to increase penalties for retailers found selling vaping products to individuals under 18.
As the Budget approaches, Chancellor Jeremy Hunt has hinted at a desire to lower taxes, potentially before a general election. However, the Institute of Fiscal Studies warns that the UK’s financial position may not support such a move, given current debt projections. The upcoming Budget will reveal the government’s fiscal plans for the next year amid sluggish economic growth.
Readers are encouraged to share their thoughts on the proposed vaping tax by emailing haveyoursay@bbc.co.uk. Contact information is optional but may be used by a BBC journalist for follow-up. Alternatively, questions or comments can be submitted on the BBC website. Submissions should include the sender’s name, age, and location for consideration.