Illicit tobacco: facts, trends and industry tactics

• The number of illicit cigarettes consumed in the UK has declined by almost 90% since 2000 – amounting to 13 billion fewer illicit cigarettes consumed per year.
• Continued investment in enforcement is essential for disrupting the illicit supply chain and protecting children from lethal tobacco products.
• Tobacco companies exploit concerns about the illicit trade to further their lobbying efforts, undermine public health policies and maximise their profits.
• ALL tobacco – whether legal or illegal – contains lethal poisons and kills up to 2 in 3 people who use it long term.

Illicit tobacco encompasses three categories of products: 

• Smuggled, non-duty paid – Legitimately manufactured products which are diverted and sold illegally somewhere other than their intended destination. This can also include duty-free cigarettes which are sold on the black market rather than being kept for personal use. Tobacco companies have historically participated in the smuggling of their own products to undermine public health policies and maximise their profits.
• Counterfeits – Illegally manufactured products which look like well-known tobacco brands and are typically smuggled into the UK.
• Cheap/illicit whites – Foreign brands lawfully produced in one country but intended for smuggling into another.

According to the HMRC, the UK illicit market is currently dominated by counterfeit and cheap white cigarettes, which are virtually all manufactured outside the UK and smuggled in as a finished product. Smuggled genuine cigarettes make up a smaller, but still significant, part of the market.

The illicit tobacco trade has strong links with organised crime and sellers often target children, increasing the risk that they will be become addicted to smoking. The lower cost of illicit tobacco also undermines the impact of public health measures by reducing the financial incentive to quit smoking. 

Since 2000, HMRC has published annual estimates of the size of the illicit tobacco market and the amount of revenue lost due to the illicit trade. These are widely cited by independent academic and economic sources, including the World Bank and the International Monetary Fund (IMF). The IMF has described the HMRC estimates as “one of the most comprehensive studies of the tax gap available internationally.”

According to HMRC, an estimated 10% of all cigarettes consumed in the UK in 2023/24 were illicit, amounting to 2 billion cigarettes. For hand-rolling tobacco (HRT), the illicit market share was 24%, amounting to 1.9 million kg of HRT.

UK illicit market for cigarettes and HRT (2000/01 – 2023/24)

_{Source: HMRC. Measuring tax gaps tables. June 2025}

Since the publication of the first UK illicit tobacco strategy in 2000, there have been significant declines in both the share and volume of illicit tobacco on the UK market. Between 2000/01 and 2023/24, the number of illicit cigarettes consumed in the UK declined by almost 90% – amounting to 13 billion fewer illicit cigarettes consumed per year – alongside a 68% decline in illicit HRT. During this time, the duty gap (the amount of tax revenue lost due to the illicit trade) has fallen from £2.5bn to £1.4bn. 

_{Source: HMRC. Measuring tax gaps tables. June 2025}

Illicit volume is the most reliable indicator of the size of the illicit market because it provides an objective measure of the amount of illicit tobacco consumed in the UK. 

_{Source: HMRC. Measuring tax gaps tables. June 2025}

The illicit market share is the proportion of total tobacco consumption made up of illicit products. While illicit volume is an objective measure of the amount of illicit tobacco consumed in the UK, the illicit market share can be influenced by changes in overall tobacco consumption. For example, there was small increase in the illicit market share for cigarettes between 2022/23 and 2023/24. This did not reflect higher illicit consumption but rather a decline in total cigarette consumption, meaning illicit products accounted for a larger share of a smaller market. Put simply, if legal tobacco consumption declines faster than the consumption of illicit cigarettes, the illicit market share will increase – even if the absolute quantity of illicit tobacco consumed is in decline. Tobacco companies often seize on increases in the illicit market share to misleadingly claim that illicit sales are increasing. 

_{Source: HMRC. Measuring tax gaps tables. June 2025}

The tobacco duty gap is the amount of tax revenue lost due to the illicit trade. This has declined from £2.5bn in 2000/01 to £1.4 billion in 2023/24. Rising tobacco duties have helped keep overall revenue from tobacco (and the value of revenue losses) relatively stable over time. This is despite falling smoking rates and a shrinking illicit market.

According to the World Bank and WHO, tobacco taxes are the single most effective way to reduce smoking rates. The evidence shows that tax increases do not have a significant impact on the illicit market, provided that they are accompanied by a comprehensive enforcement strategy and supply chain controls. A 2019 World Bank report found that the illicit trade is “relatively larger in countries with low taxes and prices, while relatively smaller in countries with higher cigarette taxes and prices.” 

Tobacco taxation has played a key role in reducing smoking prevalence in the UK since the 1990s – alongside declining illicit sales. The number of illicit cigarettes consumed in the UK has fallen by almost 90% since the turn of the century, while the price of an average pack of cigarettes has more than tripled. 

_{Source: HMRC. Measuring tax gaps tables. June 2025; ONS. RPI: Ave price - Cigarettes 20 king size filter. June 2025.}

Since 2000, the UK government has pursued an effective enforcement strategy against the illicit trade, alongside measures that have significantly reduced smoking rates – cutting demand for both legal and illegal tobacco. 

1. Disrupting the illicit trade

The first UK illicit tobacco strategy was published in 2000, following a significant growth in the illicit market in the 1990s, fuelled by tobacco manufacturers. Since, then the government has published a series of anti-smuggling strategies bringing together Border Force, HMRC and Trading Standards. The latest 5-year UK illicit tobacco strategy was published in 2024 and is supported by over £100 million in new funding. Retail-level enforcement activity is delivered through Operation CeCe, a joint HMRC-National Trading Standards operation which has been working to seize illicit tobacco since January 2021. This has since been supplemented by an additional £10 million for illicit tobacco and vapes enforcement led by Trading Standards.

2. Supporting more people to quit smoking 

Since 2000, the UK and devolved governments have introduced a series of measures that have significantly reduced smoking rates, from 27% to 11.9%. These include sustained investment in stop smoking services, bans on tobacco advertising and indoor smoking in public places, standardised packaging, tax rises to reduce affordability, and the exclusion of tobacco companies from health policymaking. This comprehensive approach has been highly effective and must be maintained. The only way to eliminate the demand for both legal and illegal tobacco in the long term is to support the 6 million smokers in the UK to quit and ensure no one starts.

The Tobacco and Vapes Bill, currently going through Parliament, will introduce a ‘generational smoking ban’ by prohibiting the sale of tobacco to anyone born after 2008 (currently aged 16 or younger). It is estimated that this will reduce smoking rates among 14-30 year olds to near-zero by 2050, permanently closing the door on the tobacco epidemic and saving an estimated 150,000 lives by 2100. 

Raising the age of sale will have a gradual impact over time, so is unlikely to significantly impact the illicit market. When the tobacco age of sale increased from 16 to 18 in 2007 it had no impact on black market sales – the number of illicit cigarettes consumed actually declined by 25% following the age of sale rise. Strong enforcement is crucial for addressing the black market.

The Bill will also give the government powers to introduce a licencing scheme for the sale of tobacco, vapes and non-medicinal nicotine products. This will help to improve illicit tobacco enforcement and crack down on underage sales.

See the ASH FAQs on the Tobacco and Vapes Bill for more information. 

Tobacco companies have a long track record of exploiting the illicit tobacco trade to further their lobbying efforts, undermine public health policies and maximise their profits. 

1. Facilitating the smuggling of their own products – Tobacco manufacturers have repeatedly been caught facilitating the smuggling of their own products to undermine tobacco taxes and public health measures. They do this by deliberately oversupplying markets along known smuggling routes, knowing that much of their stock will be smuggled into countries like the UK. For example, in 2014 British American Tobacco was fined by HMRC for deliberately oversupplying Belgium with UK-manufactured tobacco. The availability of artificially cheap tobacco keeps people addicted, drives up consumption, and boosts both legal and illegal sales – all of which generate profit for manufacturers. Evidence suggests that tobacco companies continue to facilitate and profit from smuggling worldwide, with their products making up around two-thirds of the global illicit tobacco trade.
2. Funding research which inflates the size of the illicit market – Tobacco companies fund flawed research that exaggerates illicit trade levels, which they use to lobby against higher taxes and stronger regulations. They use these figures in media and marketing campaigns to fuel concern about illegal sales and to promote the message that further regulation will expand the illicit market.  A review of tobacco industry-funded studies found that industry research overestimates the size of the illicit market by 17% to well-over 100%, depending on the country. The review concluded that: “The primary purpose of tobacco industry-funded data on the illicit tobacco trade seems to be to serve as a platform for the industry’s lobbying and public relations strategies.”
3. Lobbying policymakers to weaken regulations – Since the announcement of the generational smoking ban in October 2023, tobacco industry lobbying efforts have gone into overdrive. Tobacco companies have been “inundating MPs with lobbying material in a bid to persuade them to oppose the changes.” Just as with industry opposition to plain packaging, much of this lobbying in parliament and in the media has focused on illicit tobacco. Previous industry claims that regulation would fuel the illicit trade have consistently proven false, with the illicit market continuing to decline. Further detail about industry lobbying is set out in the ASH briefing on tobacco industry tactics.
4. Presenting themselves as partners in tackling the illicit trade – Despite their historical complicity in smuggling, tobacco companies have a long history of presenting themselves as partners in tackling the illicit trade and often seek to collaborate with governments and enforcement agencies. However, manufacturers have little incentive to address the illicit trade, instead using partnerships to rehabilitate their public image, undermine enforcement efforts, and gain commercial advantage over competitors. For example, Japan Tobacco International (JTI) recently launched a campaign urging the government to take stronger action against illegal tobacco and offering support to retailers to reduce illicit sales. As well as presenting JTI as a concerned partner in the fight against illicit tobacco, the campaign clearly furthers their lobbying strategy, providing a website that urges MPs to meet with the company and a template letter that members of the public can send to their MP expressing concern.

• ASH. From smuggling to spin: how tobacco giants hijacked the illicit trade debate.
• Illicit Tobacco Partnership website and resources including a PR guide for stakeholders.
• LGA blog. Illicit tobacco: A shrinking market, but a persistent local threat.
• Keep It Out illicit tobacco campaign for the North East of England.
• HMRC and Border Force. Stubbing out the problem: A new strategy to tackle illicit tobacco. March 2024.
• HMRC data on tobacco tax gaps and illicit market volume/share. Tax gaps: Excise (including alcohol, tobacco and oils). June 2025.
• The Tobacco Atlas. Illicit Trade.
• Tobacco Tactics pages:
  • Illicit Tobacco Trade
  • Tobacco Smuggling
  • BAT Involvement in Tobacco Smuggling.
  • Imperial and Gallaher Involvement in Tobacco Smuggling
  • JTI Involvement in Smuggling
  • PMI’s “Illicit Trade” Anti-Plain Packaging Campaign