Why are UK tobacco sales falling?
HMRC recently published the latest tobacco clearances (legal sales) data, prompting claims from the Institute of Economic Affairs (IEA) that falling sales reflect a surge in illicit trade driven by rising taxes.
But what does the data show?
Tobacco clearances have halved since 2019. The IEA have pointed to a sharp decline between 2021 and 2025 as evidence of a booming illicit market. However, if we take a longer view, we can see that cigarette clearances (which make up the majority of tobacco sales) have fallen consistently since 2015.
The pandemic disrupted smoking behaviour, coinciding with a spike in tobacco purchasing which has since faded, creating the appearance of a sharp decline since 2021.
But if we look at the dotted green line on the graph below it is clear that this decline is consistent with a long-term downward trend.
How can we explain the data?
The good news is that declining tobacco clearances appear to be driven mainly by falling smoking prevalence and reduced consumption among those who still smoke. As a country, we’re smoking less and therefore less tobacco is being sold.
According to the ONS, smoking in the UK has fallen by a quarter since 2019, reaching 10.6% in 2024. The proportion of smokers who smoke less than once a day has more than doubled since 2019, reaching almost a third of all smokers in 2025. These smokers purchase less tobacco than those who smoke daily.
We’re also vaping more; there are now more vapers than there are smokers. For some this is a transition away from tobacco entirely and others ‘dual’ use, substituting some of their smoking for vaping.
The illicit trade may also be a factor, but available data suggests its impact is limited. We need more evidence to know for sure.
HMRC data shows that illicit tobacco consumption is stable as of 2023/24 and has declined substantially over the long term, with illicit cigarette consumption falling by almost 90% since 2000.
It is possible that the ongoing cost of living pressures may have pushed some smokers, particularly those on lower incomes, to seek out cheaper, illicit alternatives. However, the evidence is clear that the vast majority of smokers do not buy illicit and in general higher prices have been a key factor in falling consumption.
Taken together, the evidence points to a clear conclusion: declining tobacco sales are being driven primarily by reduced smoking, not a surge in the illicit trade.