Economic impact of smoking

Updated May 2026 in line with the 2026 Ready Reckoner.

Key points

• Smoking costs society in England £44.8bn a year through a combination of lost economic productivity and health and social care costs. This rises to £83.5bn if the QALY cost of early deaths due to smoking is included.
• In 2026, smoking is estimated to cost the public finances in England £16.9bn per year, more than double the £7.5bn raised through tobacco taxes.
• Investing in tobacco control will boost employment and productivity. Around 230,000 people in the UK are unfit to work due to smoking-related illnesses like cancer, heart disease, COPD and diabetes.

The profound and far-reaching impact of smoking on society and the economy means there are many ways to express the costs and quantify the impact. This page sets out the key costs and provides a short explanation of how these are assessed.

• Total cost to society in England (£44.8bn)
• Cost to the public finances in England (£16.6bn)
• Impact of smoking on employment
• QALY cost of early deaths due to smoking (£38.6bn)
• Cost to people who smoke and their families

Total cost to society in England

ASH estimates smoking costs England £44.8bn annually (and £53.2bn across the UK). This includes:

• £27.8bn in lost productivity (early deaths, reduced employment, and lower earnings due to tobacco consumption)
• £1.77bn in healthcare costs
• £14.8bn in social care costs to the state and families
• £383m in smoking-related fires

These costs can be broken down by region, local authority, combined authority, parliamentary constituency, and ICB using the ASH Ready Reckoner. For more information see the Ready Reckoner methodology and the underlying economic modelling: June 2026 CBPF Model.

Note: The £44.8bn cost to society doesn’t include the QALY cost of early deaths due to smoking (£38.6bn) which is set out below.

Note: There are some some elements in the Ready Reckoner that are not used by the UK government in their modelling, specifically:

• The cost of informal and unmet care needs for those unable to secure local authority care
• Reduced Gross Value Added (GVA) due to expenditure on tobacco products compared to other goods and services

To view the analysis without these components, select “Show costs, excluding GVA and informal & unmet social care, as used in DHSC modelling” in the Ready Reckoner.

Cost to the public finances in England
 

Smoking is estimated to cost the public finances in England £16.9bn per year. After accounting for £7.5bn in tobacco tax revenue and £284m in reduced pension payments due to early deaths, the net loss is £9.1bn. This includes:

• £2.5bn in reduced tax revenue from lost productivity (£10.0bn before excise tax revenue is accounted for).
• £3.6bn in increased social security spending (£3.9bn before reduced pension payments are accounted for)
• £3.0bn in public service costs (healthcare, social care and fire services).

Note: These figures refer to things which have a direct cost to the public finances (e.g. reduced tax revenue). This is different to the overall costs of smoking to society which are significantly larger, but do not all directly impact the public finances.

^{Calculations by Landman Economics for ASH. See the June 2026 CBPF Model for the full methodology.}

Impact of smoking on employment

It is estimated that around 230,000 people in the UK are unfit to work due to smoking-related illnesses like cancer, heart disease, COPD and diabetes. These diseases mean that smokers need care (help with basic tasks like dressing, walking across a room and using the toilet) on average 10 years earlier than non-smokers. For every person killed by smoking, at least another 30 are estimated to be living with serious smoking-related disease and disability.

Reducing smoking rates will:

• Support people back into the workforce and prevent many more becoming sick in the first place, increasing employment and productivity.
• Generate more UK jobs as spending switches away from tobacco to other goods and services. Spending on tobacco has almost no positive impact on UK employment due to the lack of any domestic production of tobacco or cigarettes.

Cost of early deaths due to smoking

Early deaths from smoking in England cost £38.6bn annually. This is calculated using the HM Treasury ‘green book’ QALY values, which assign a financial value to each year of life lost. 

This figure is excluded from the overall cost of smoking to society figure, as the value of lives lost is a subjective measure rather than a direct financial cost. It is, however, a further way to assess the significant impact of smoking every year on people’s lives and capture the intrinsic value of lives lost to smoking, separate to tangible costs such as healthcare and productivity.

^{Calculations by Landman Economics for ASH. See the June 2026 CBPF Model for the full methodology.}

Cost to people who smoke and their families

People who smoke in England spend around £14.9bn in total on tobacco, averaging £2,964 per smoker. This equates to more than 10% of the £25,425 average disposable income for England (gross disposable household income per head). Quitting smoking is one of the best things people who smoke can do to boost their income. 

See the ASH Ready Reckoner for local estimates of tobacco spending.

Households with smokers face higher poverty rates. In 2018/19, 21% of smoking households in the UK lived below the poverty line, amounting to one million households. When tobacco expenditure was included in the assessment of poverty, this rose to 32% (1.5 million households), including:
 

• 1 million children.
• 2.2 million working-age adults.
• 400,000 pensioners.

^{Source: Landman Economics. Estimates of poverty in the UK adjusted for expenditure on tobacco – 2021 update. July 2021}

June 2026 Cost Benefit and Public Finance Model of Smoking, Version 2.4. Howard Reed, Landman Economics.