Vape tax: What it means for prices, consumers and retailers

Vaping products are expected to become more expensive as a new tax takes effect on Thursday.

Legislation coming into force on October 1 will see a new tax introduced on vape liquids and a duty-stamp scheme to enforce the new rules.

The measures – known as Vaping Products Duty and the Vaping Duty Stamps Scheme – are designed to tackle youth vaping and improve public health.

Consumers can expect to pay several pounds more for many vaping products when the new tax is implemented.

What is the Vaping Products Duty?

Vaping Products Duty (VPD) is a new excise duty on vaping products that was announced at the Budget in 2024.

It will be charged on vaping products that are produced in, or imported into, the United Kingdom from October 1, so prices will not necessarily change overnight.

VPD will be charged a flat rate of £2.20 per 10 millilitres of vaping liquid, regardless of how much nicotine is contained in the product.

The UK Government says the measure will have an impact on an estimated 5.1 million individuals who vape, with heavy vapers facing the highest burden.

When will prices increase?

Retailers can continue to sell existing stock that was produced or imported before October 1. As that stock runs out, new duty-paid stock will enter the market and prices may change product by product.

There is a transitional period for existing stock. Retailers can sell unstamped stock they already hold until March 31, 2027. From April 1, 2027, vaping products outside duty suspension will need to have a vaping duty stamp.

Prices might not increase by the full £2.20 duty as manufacturers could decide to absorb some of that cost themselves depending on how the market reacts.

What is the Vaping Products Duty Scheme?

The VDS scheme is a UK government compliance measure introduced by HMRC to support Vaping Products Duty (VPD), requiring secure physical and digital labels on retail vaping products to prove tax has been paid.

The scheme will provide an additional way for HMRC to identify legitimate products and tackle non-compliance in the market.

It also gives HMRC, Border Force and Trading Standards additional enforcement tools to help tackle illicit imports and ensure businesses are complying with the rules.

‘It’s important these measures are implemented’

Experts in tobacco control have broadly backed the introduction of the new duty, arguing it strikes a balance between maintaining vaping as a smoking cessation aid while making the products less attractive to young people.

They also say the new tax and duty stamp regime should provide authorities with additional tools to tackle the illicit market and improve enforcement across the sector.

Linda Bauld, the Scottish Government’s chief social policy adviser, said: “Vaping is still going to be less expensive than smoking, which is really important, but it is going to increase the price, which is probably not a bad idea.

“I think (adults who vape) are going to be disappointed that it is increasing the price but, on the other hand, adults who have smoked and have quit smoking through vaping, also recognise they don’t want young people who don’t smoke to start vaping, so it’s a proportionate measure.

“The other really important component of this is to help crack down on illicit trade, so there will be an excise stamp that is effectively on the products and that will make it easier for HMRC and Border Force to make sure these are legal products, which is also something I think adult vapers would welcome.

“We know vaping is a lot less harmful than smoking but it’s not without risk – particularly for people who have never smoked.

“There are likely to be health effects and even in the short-term we know nicotine addiction in young people can affect concentration, sleep and cause anxiety, nicotine withdrawal.

“So it’s important this measure, along with others, is implemented.”

‘In some ways, this is a tax on the poor’

Not everyone in the industry is convinced the new duty will achieve its intended aims.

Some specialist retailers argue the tax will increase costs for adult users while doing little to tackle underage vaping.

Mark Piggott, director of Scotvapes Highland, told STV News: “It’s going to make a big change to the business.

“I can understand why it’s happening, although the result of it is going to be a lot of extra taxation on people who are already the hardest hit by the cost of living crisis and I’m not sure it will be policed uniformly across the business.

“A lot of the non-specific sellers do manage to sell things under the counter, which we obviously can’t do because we’re a vape-specific business.”

“I don’t think taxation has got anything to do with stopping children vaping. We don’t serve children in our shops, we’re an over-18s store, underage customers who buy vapes buy them in non-specific retail shops, that’s well-known through the industry

“Making vapes more expensive will put them out of the reach of people with lesser income, that’s adults as well as underage vapers who buy in non-specific stores.

“In some ways, it is a tax on the poor.”

‘Tax will help curb illicit sales and youth vaping’

Public health campaigners have welcomed the new duty, arguing it could help tackle illegal sales while encouraging more people to quit nicotine products altogether.

ASH Scotland said higher prices have historically been an effective tool in reducing tobacco consumption and believes the new levy could have a similar impact on vape use, particularly among young people.

It also argues the regime will strengthen enforcement by giving HMRC a greater role in policing the market.

Sheila Duffy, chief executive of ASH Scotland, said: “It will bring HMRC into play with enforcement. We know that Trading Standards are overrun, they can’t patrol all the premises, they don’t have the powers. This will bring the big guns in and it should help shut down illicit (outlets).

“We know there is a price sensitivity with these purchases. When you put tax, duty, on tobacco, it motivates people to quit, it makes them think ‘do I really want to be spending this much on this product or could I buy a new phone or pair of trainers instead?’.

“So I think it’s very good for motivating quit attempts, I think it’s good for discouraging children and young people from buying them.

“An excise tax, we’re used to that with alcohol and tobacco, you can’t just sell it willy-nilly, you have to have a tax stamp, you have to pay that duty. This is a good thing because it will be easier to track what’s going where and it will make sure HMRC gets involved in stopping the illicit trade as well.”