Vape tax comes into force this week: Here’s what’s changing and how much costs will rise

This week a new tax is being imposed on vape products in Britain. It is set to make vaping significantly more expensive and rake in half a billion pounds a year for the Treasury.

This is Money examines what tax is being introduced, why, how much it will cost vapers and what industry bodies and firms involved in vaping think about the changes. 

One online vape shop owner told This is Money: ‘It’s a sin tax on the thing that gets people off the actual sin.’ 

What is changing?

From October 1, 2026, a new Vaping Products Duty comes into effect. 

Dubbed the ‘vape tax’, the duty will be imposed at a rate of £2.20 per 10ml of e-liquid. Once VAT at 20 per cent is applied on top, the sum will be £2.64 per 10ml of e-liquid. 

The new vape tax means, in time, vapers could see the cost of vaping products rise by 264 per cent, according to the UK Vaping Industry Association (UKVIA).

The tax is a flat rate on all liquids, meaning it is the same regardless of the strength of nicotine in the liquid. It includes nicotine-free liquid. 

Pre-filled products that contain vaping liquid will also be subject to the duty.

Why is the duty being introduced?

In the 2024 autumn Budget, former chancellor Rachel Reeves announced the cost of vaping and smoking would increase following tax rises. 

Reeves said a new tax on vapes of £2.20 per 10ml of e-cigarette liquid would kick in from October 2026.  

At the time, Reeves said the new vape tax would be accompanied by an equivalent increase of £2.20 per 100 cigarettes in tobacco duty to ‘maintain the financial incentive to switch from tobacco to vaping’. 

The vape tax is part of a wider government strategy to curb youth vaping by addressing the price of vapes so that they are no longer at ‘pocket money prices’. 

Reeves also set out immediate above-inflation hikes of 2 per cent on tobacco and 10 per cent for hand-rolled tobacco. 

In its last Budget before losing an election, the previous Conservative government said it planned to introduce a vaping tax and set up a consultation on the changes. 

A Treasury analysis has estimated that the new vape tax is on course to raise about £550million a year by 2030-31. 

Will costs for vapers rise straight away?

The full cost impact of the duty on vapers may not be felt straight away. 

Shane Margereson, owner of online vape shop Ecigone, told This is Money: ‘For vapers it won’t all land on October 1. 

‘Shops can keep selling stock bought before October at pre-duty prices until the end of March 2027, so prices will step up gradually over the winter rather than jumping overnight, and the popular flavours will sell through first.’

He added: ‘The duty is charged per millilitre, so it punishes volume, and the vapers who get through the most liquid will feel it most. 

‘For the trade, the duty isn’t the only new cost. Manufacturers have to buy machinery to apply duty stamps and they need bonded warehousing, with extra compliance and admin on top, and all of that lands on the shelf in the end. 

‘The industry will take the hit and adjust, because it always has.’

Margereson said: ‘A 10ml nicotine salt roughly doubles in cost, and a 100ml short-fill picks up £26.40. 

‘We went through our own order data for almost 18,000 customers, and the typical vaper gets through between 5.7 and 10.3ml a day, which means £549 to £993 a year in duty and VAT.’

According to the UKVIA, the largest price increases will be seen on lower-cost products, which are typically used by lower-income vapers.

The UKVIA research also found that average reported weekly e-liquid consumption was 24ml – more than twice the 11.9ml estimate used by HMRC in its modelling for the duty. 

What do vape firms need to consider?

Vaping products manufactured in, or imported into, the UK on or after October 1, 2026, must have a duty stamp. 

From April 1, 2027, the retail packaging of all vaping products sold or supplied in the UK must carry a valid vaping duty stamp.

Businesses that do not comply with the new rules may face civil or criminal sanctions. 

Are most vapers aware of the changes? 

The UKVIA recently conducted a survey of nearly 3,500 adults who vape to quit or stay off cigarettes.

The survey found that more than half had no idea the new duty was being introduced, while nearly 60 per cent said they did not know the duty would also apply to nicotine-free products.

The UKVIA is warning that the Government’s vaping products duty could see up to half of those who used to smoke tobacco return to it.

Will this push more vapers to return to smoking?

One anonymous vaper This is Money spoke to was resolute in her response to the vape tax coming into force in October. She said: ‘I’m going back to smoking.’ 

Margereson, of Ecigone, said: ‘It’s a sin tax on the thing that gets people off the actual sin.’

In its recent survey, the UKVIA found that half of respondents said they would return to smoking or turn to the black market once the duty comes into force – equivalent to around 2.5million adults based on the UK vaping population. 

Only one in ten said their vaping habits would be unaffected and about two thirds said they believed the duty would reduce the number of adult smokers making the switch to vaping. 

Around two thirds of people surveyed said they believed the duty would have little or no effect on youth vaping. 

More than 90 per cent of people surveyed said the duty would increase the black market. 

Almost 70 per cent said they wanted the duty completely scrapped, while one in five said they wanted it introduced at a lower rate. 

Dan Marchant, director of Vape Club, said: ‘We know we are unlikely to see the duty disappear altogether, but the cost of getting this wrong is simply too high to bear, both for the NHS and for people across the country who rely on vaping to stay away from cigarettes.’ 

John Dunne, director general of the UKVIA, told This is Money: ‘The immediate impact of the Vaping Products Duty will be to make vaping significantly more expensive for millions of adults, including people who have switched completely away from cigarettes.’

He added: ‘There is absolutely no debate that we need to prevent young people from accessing vaping products, and it’s not that the industry is flatly opposed to a duty increase, but the incoming rate is nothing short of a public health timebomb.’

Dieno George, chairman of One Pound Liquid, said: ‘We recognise that the duty is here to stay, and responsible retailers have spent months preparing for it. 

‘What we want is a commitment to review its effect on smoking rates and the illicit market, a freeze on the rate so it is not raised further, and proper funding for enforcement.’

This is Money contacted HMRC for comment.