The UK government will introduce a new excise tax on nicotine vape juices and liquids from 1 October 2026 under legislation contained in Finance Bill 2025–26, creating the country’s first dedicated duty on vaping products.
The measure, known as the Vaping Products Duty (VPD), will apply to vaping liquids containing nicotine and glycerine or glycol, or liquids intended to be vaporised, unless classified as medical or tobacco products. The duty will be charged at a flat rate of £2.20 per 10 millilitres of liquid, regardless of nicotine strength.
Registration for manufacturers and importers will open on 1 April 2026.
Revenue impact
According to Budget 2025 costings certified by the Office for Budget Responsibility, the measure is projected to raise:
- £135 million in 2026–27
- £400 million in 2027–28
- £465 million in 2028–29
- £530 million in 2029–30
- £565 million in 2030–31
The measure carries an initial Exchequer cost of £50 million in 2025–26 due to implementation and transitional effects.
Tobacco duty, by comparison, is expected to raise approximately £8.1 billion in 2025–26, according to HM Revenue & Customs data. The government has confirmed that tobacco duties will rise by a commensurate amount when VPD is introduced to maintain the financial incentive for smokers to switch to vaping.
Policy objective
The government says the policy is intended to reduce the affordability and appeal of vaping products, particularly among young people and non-smokers, while preserving incentives for smokers to move to less harmful alternatives.
A flat-rate structure was adopted following consultation in 2024, replacing an earlier proposal for tiered rates based on nicotine strength. The Treasury said the flat rate aligns with international practice and simplifies compliance for businesses and enforcement for HMRC.
There is currently no excise duty on vaping products in the UK. VPD will be incorporated into the existing excise framework under the Customs and Excise Management Act 1979.
Who is affected
The measure will affect:
- UK manufacturers of vaping products
- Importers and warehousekeepers
- Retailers and wholesalers
- Distributors and supply-chain stakeholders
- An estimated 4 million adult vapers in Britain
Heavy users are expected to bear the greatest financial impact. The government acknowledges that some individuals may respond to higher prices by switching to tobacco products, but says the simultaneous increase in tobacco duties is intended to mitigate that risk.
Equalities and demographics
Government analysis indicates:
- 55% of daily or occasional e-cigarette users are male, compared with 50% of the UK adult population.
- People aged 16–24 account for 20% of users,
- 25–34 account for 22%,
- 35–49 account for 25%,
Each of these groups is overrepresented relative to their share of the adult population.
HMRC stated it does not currently hold sufficient data to assess impacts across other protected characteristics.
Administrative and operational impact
The duty is expected to apply to approximately:
- 200 UK manufacturers
- Up to 750 importers and warehousekeepers
Businesses will be required to register, submit monthly returns and comply with excise controls. One-off costs include system changes, staff training and registration. Ongoing costs will include reporting and compliance obligations.
HMRC estimates the total cost of delivering the new regime at £140 million, including:
- £20 million in capital investment for IT systems
- £120 million in staffing and operational resources through 2029–30
Up to £10 million will be made available to Border Force for early enforcement activity and compliance testing.
Civil penalties and criminal offences will apply for non-compliance, consistent with other excise duties. A Justice Impact Test concluded the overall impact on courts and prisons is expected to be minimal.
Health impact and monitoring
The government expects the measure to contribute positively to public health outcomes by reducing affordability among young people and non-smokers. The Chief Medical Officer has previously stated that individuals who do not smoke or vape should not start.
The Treasury said the combined approach of raising vaping and tobacco duties is designed to encourage heavy users to reduce consumption while maintaining incentives for smokers to transition away from combustible cigarettes.
The government said the impact of VPD will be evaluated once sufficient data is available, particularly in relation to youth uptake and the objective of creating a “Smoke-Free Generation.”
