UK Vape Tax: Is It Actually Happening? Our Predictions

The government released its Spring Budget for 2024 earlier this year, and the members of the UK vaping community were dealt an unpleasant blow when they noticed language indicating that a new tax on vaping products was on the way with a planned implementation date of 1 October 2026.

Around the same time, the Tobacco and Vapes Bill was introduced and began working its way through Parliament. The bill included language that would have allowed the government to ban disposable vapes and enact flavour restrictions, but it didn’t include the proposed vape tax. The bill also didn’t pass before the dissolution of Parliament, and the new Labour government will need to restart the process with a new bill.

This article is your complete guide to the potential UK vape tax as we understand it. Before we get into the details, though, here’s an overview of the key things you need to know.

• The Spring Budget 2024 isn’t a legislative document; it merely outlines the government’s planned fiscal direction for the year. The proposed tax will need to be introduced as a bill, and that hasn’t happened yet.
• The budget outlined the fiscal direction of the previous government. Whether the Labour government intends to propose a vape tax – either as part of a new Tobacco and Vapes bill or as a separate bill – is unknown. In other words, we don’t know if a vape tax is actually going to happen.
• If the vape tax does happen, it will be a long time before you begin paying it.
• We oppose the vape tax for reasons we’ll outline in this article.

How Much Will the Vape Tax Be?

A public consultation on the proposed vape tax took place from 6 March until 29 May. According to consultation document, the plan was to implement a tiered tax that would increase based on the nicotine strength of the product.

• Nicotine-free vaping products would increase in price by £1 per 10 ml of e-liquid.
• Nicotine vaping products with strengths below 11 mg/ml would increase in price by £2 per 10 ml of e-liquid.
• Nicotine vaping products with strengths of 11 mg/ml and higher would increase in price by £3 per 10 ml of e-liquid.

The Conservative government didn’t begin the legislative process for the vape tax prior to the general election, but the consultation outlines their general thinking around the tax. For many people, the price increases as proposed in the consultation would be quite significant.

What Are the Arguments in Favour of the Vape Tax?

According to the previous Conservative government, the supporting arguments in favour of the vape tax are as follows.

• It would raise an estimated £40 million yearly in funding for the NHS.
• It would increase the cost of vaping, thus disincentivising those who aren’t already nicotine users from taking it up.
• It would be much smaller than the tax on cigarettes, so the financial incentive to switch from smoking to vaping would remain.

An additional possible reason for implementing the tax – which hasn’t been explicitly stated by the government – is that if the plan to establish a smoke-free generation really happens, it will eventually lead to a time in the future when the government will no longer collect any tax revenue from tobacco sales. Currently, tobacco duties generate about £8.8 billion in revenue per fiscal year. That money will eventually need to be replaced somehow.

What Are the Arguments Against the Vape Tax?

We are opposed to the vape tax and believe that it would be premature to implement such a tax until tobacco use in the UK is eliminated. At that point, the government can work to disincentivise all forms of nicotine use. Until that happens, though, a tax on vaping products would be counterproductive. Here’s why.

• Smoking-related care costs the NHS £3 billion per year, and the total cost of smoking to the British economy is £17 billion yearly. Encouraging more people to switch to vaping would do much more to alleviate the financial strain on the NHS than a vape tax ever could.
• When the idea of a vape tax was originally put forth, media coverage suggested that the tax would only cost an average vaper £13.75 per year. The taxes described in the public consultation, however, are much higher than that and could increase the cost of e-liquid by as much as 143 percent in some cases. For some people, the vape tax will cause a significant financial strain.
• Any measure that reduces the financial incentive to switch from smoking to vaping increases the chance that smokers will continue to smoke instead of switching.
• Due in part to negative media coverage from the United States, some smokers have the false idea that vaping and smoking are similar in risk. Public Health England have worked hard to combat this misconception. If the government implements a “sin tax” on vaping, it could undo those efforts.

Why Wasn’t the Vape Tax Included in the Tobacco and Vapes Bill?

The vape tax wasn’t included in the Tobacco and Vapes Bill because the main purposes of the bill were regulatory rather than fiscal in nature. The Tobacco and Vapes Bill was intended to establish a smoke-free generation and to enact stricter limits on the types of vaping products allowed for sale in the UK. The fact that the vape tax wasn’t included in the bill didn’t indicate a change of heart; the government always considered the tax a separate issue.

Also, the Tobacco and Vapes Bill was intended to have a much faster timeline, with the smoke-free generation law and the new vaping product restrictions being put in place around the end of 2024 or the beginning of 2025. The original planned implementation date for the vape tax was 1 October 2026.

How Does the Labour Government Feel About the Vape Tax?

As we mentioned above, the Tobacco and Vapes Bill was introduced under the previous Conservative government and didn’t pass before the dissolution of Parliament. The public consultation regarding the vape tax also took place under the previous government. Apart from the Tobacco and Vapes bill being discussed in the King’s Speech, no one has said anything specific about exactly how and when the new Labour government intends to reintroduce the bill or the proposed vape tax.

How Could the Vape Tax Play Out in 2024-2025?

Because no government officials are actively talking about the vape tax, it is impossible to know exactly how the vape tax will play out. It appears that the new government considers the Tobacco and Vapes Bill to be a higher-priority issue, though, and no progress has been made on that yet. As things stand, it seems unlikely that a vape tax will be implemented by October 2026 as was originally planned.

There are three ways in which the vape tax could play out.

• It could be introduced by the Labour government as a standalone bill. This probably won’t happen until progress resumes on the Tobacco and Vapes Bill.
• It could be introduced as part of a new Tobacco and Vapes Bill. As we noted above, though, it is more likely that the new vape regulations and the vape tax will remain separate issues.
• The government could decide against implementing a vape tax at all.

Although no one from the Labour government has said anything publicly about the vape tax to date, the tax proposed under the previous government seemed to have broad support from both parties. Nevertheless, the fact that the tax is still a long way from being implemented means that you still have time to voice your opinion. Contact your MP and describe the impact that the vape tax would have on you and your family. It’s still possible to prevent the tax from happening.