The UK government has announced its first-ever tax on vapes, starting in 2026, as part of a broader plan to reduce smoking and discourage vaping among non-smokers. Chancellor Rachel Reeves revealed the new tax on Wednesday, alongside hikes in duties on tobacco, wine, and spirits.

New Vape Tax to Launch in 2026

The tax on e-cigarettes, which have gained popularity among young people, will begin in October 2026. The rate will be £2.20 per 10ml of vaping liquid. This move follows the UK government’s recent decision to ban single-use vapes in England and Wales, starting in June. By introducing the vape tax, the government aims to address health concerns around vaping, particularly among young users.

Increased Tobacco Duty

Alongside the vape tax, cigarette duties are set to rise to further encourage people to quit smoking. The duty on a pack of 100 cigarettes will go up by £2.20, with the annual tobacco duty increase set to continue. Additionally, duty on hand-rolling tobacco will increase by 10% this year, adding roughly 66p to a pack of 20 cigarettes and £1.58 for 30g of hand-rolling tobacco. Tobacco taxes are projected to generate an additional £180 million by 2029.

Industry Responses and Concerns

Industry leaders have expressed mixed reactions. British American Tobacco supports the flat vape tax, calling it easier to manage, but suggests it start in 2025 to combat the illegal vape market. JTI’s Nicky Small, however, warns that the tobacco tax hike could unintentionally drive consumers toward cheaper, unregulated products.

Changes in Alcohol Duty

The government will also adjust alcohol duties starting in February. Wine and spirits will see tax increases in line with inflation, while the duty on draught beer will decrease by 1.7%, reducing the cost of a pint by 1p. The UK Spirits Alliance, representing over 280 distilleries, criticized the hike on spirits as a “kick in the teeth,” saying it threatens the survival of many pubs and small distilleries.

Pub Industry Pushback

Pub owners have voiced concerns over rising operational costs, citing not only the alcohol duty increase but also the upcoming rise in employer national insurance, the national living wage, and cuts in business rates relief. Admiral Taverns CEO Chris Jowsey stated that British pubs are “massively overtaxed” and that the draught duty cut is too small to make a real impact. Greene King’s Nick Mackenzie agreed, calling the reduction a “drop in the ocean” amid rising costs.

What These Changes Mean for the Public

These tax adjustments reflect the government’s health and revenue goals, addressing vaping and smoking while supporting pubs. With prices set to rise on tobacco and alcohol, and a new vape tax on the horizon, consumers and businesses alike are preparing for the impacts.

Source: (FT.com)