UK tobacco prices to rise as chancellor hikes excise duty to accompany vape tax

UK tobacco prices will go up as a result of an increase in excise duties announced by the government during its spring budget.

The 6th March announcement aims to keep the price of some tobacco alternatives more affordable, following a jointly announced introductory tax on e-liquids in the country.

Tobacco duties will be increased by £2 per 100 cigarettes or 50 g of tobacco upon the expected introduction of the duty in October 2026.

The measures will first go through a public consultation, which is intended to run until 29th May 2024. The consultation sets out the proposals for how the duty will be designed and implemented, and the responses will be published in a formal response document.

Heated tobacco may be affected

Although heated tobacco is not specifically mentioned, TobaccoIntelligence holds that it will also be affected by the tobacco tax increase – as it was previously made a taxable tobacco product category in the country.

However, the measures do not tackle herbal heated products, and oral nicotine pouches may be addressed at a later stage. Questions in the consultation refer to the potential redistribution of the nicotine pouch market share due to the vaping tax.

The UK government is considering introducing the vaping tax at three different rates: £1 per 10 ml of nicotine-free e-liquids, £2 per 10 ml on e-liquids containing 0.1 mg to 10.9 mg per ml, and £3 per 10 ml of e-liquids that contain 11 mg/ml or more of nicotine. This is the equivalent of a 48% increase for nicotine-free e-liquids, a 95% increase for e-liquids containing nicotine up to 11 mg/ml, and for those with higher nicotine (at least 11 mg/ml), the proposed increase in price is 143%.

‘Financial incentive to choose vaping over smoking’

The vaping tax is meant to discourage uptake by youth and non-smokers. But the increased tax on tobacco products is also being introduced to maintain the attractiveness of vaping as a potential smoking-cessation aid.

“Because vapes can also play a positive role in helping people quit smoking, we will also introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking,” UK chancellor Jeremy Hunt said in Parliament.

The measures come in the wake of plans to ban the sale of disposable e-cigs to tackle the rise in youth vaping announced by British prime minister Rishi Sunak in January. They form part of the government’s response to its consultation on smoking and vaping, which was launched in October last year, and reiterate the government’s commitment to introduce a law preventing tobacco from being sold to anyone born on or after 1st January 2009.

– Antonia Di Lorenzo TobaccoIntelligence staff

Photo: Simon Walker

Antonia Di Lorenzo

Assistant news editor/senior reporter

Antonia is a member of the editorial team and holds a masters degree in Law from the University of Naples Federico II, Italy. She moved in 2013 to London, where she completed a postgraduate course at the London School of Journalism. In the UK, she worked as a news reporter for a financial newswire and a magazine before moving to Barcelona in 2019.