ASH comment on Budget decisions on tobacco and vaping

Immediate release: Wednesday 6th March

In today’s Budget the Chancellor announced that “the government is introducing a new duty on vaping and increasing tobacco duty from October 2026, raising revenue to support public services like the NHS.”[1] This will maintain the current financial incentive to choose vaping over smoking.

• The excise tax on vaping will raise £120 million in 2026-7 rising to £445 million by 2028-9
• The additional tobacco duty will raise a further £110 million in 2026-7 and £170 million in 2027-8 and in 2028-9

Vaping excise duty
A 12-week consultation on the policy design and technical details was launched today.[2] Registrations for the vaping duty will open on 1 April 2026. The rates will be:

• £1.00 per 10ml for nicotine free liquids,
• £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and
• £3.00 per 10ml on liquids that contain 11mg or more per ml.

Tobacco tax changes
The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.

Deborah Arnott, chief executive of Action on Smoking and Health, said,
“Putting excise duty on vapes gives much needed additional powers to Border Force and HMRC to stop the import of illegal vapes which are flooding the market and need to be brought under control. These are powers they already have for tobacco which helped reduce the consumption of illegal cigarettes by 80% between 2000 and 2021."

“The additional increase in tobacco taxes is welcome, as keeping vaping cheaper than smoking is vital to encourage smokers trying to quit to switch to vapes which are the most effective stop smoking aid available over the counter.”

“However, it’s smokers and those trying to quit and stay quit who will be paying these extra taxes. It takes the average smoker thirty attempts before they successfully quit, and specialist support and anti-smoking campaigns can increase the likelihood of success many times over. These new taxes should be used to plug the cuts in prevention measures and help the government achieve its smokefree 2030 ambition.”

The additional tax take of £230 million in 2026-7 rising to £615 million in 2028-9 will come from the pockets of consumers not the industry. Smokers and smokers trying to quit and stay quit will pay the price. The Chancellor has missed the opportunity to raise up to £700 million more to help plug the public finance gap, by capping the excessive and extreme profits of the tobacco manufacturers.

Dr Rob Branston, senior lecturer in business economics at the University of Bath said,
“Tobacco manufacturers are an untapped source of tax revenue, with net operating profits far in excess of other businesses. For example Imperial Tobacco made 71% profits in 2021, that’s £71 for every £100 turnover, more than ten times as great as the profit margin of BP. [3]

"By capping profits to 10% while keeping retail prices the same, the government could raise up to £700 million a year from tobacco manufacturers without putting an additional burden on consumers. This is far more than the £500 million its estimated that the additional tobacco and vape tax will raise, all of which will come from the pockets of consumers rather than industry profits.”

ENDS

Notes to the Editor
Action on Smoking and Health is a health charity working to eliminate the harm caused by tobacco use. For more information see: ash.org.uk. ASH receives funding for its programme of work from Cancer Research UK and the British Heart Foundation.

Contact: press@ash.org.uk Deborah Arnott, Chief Executive, and Dr Rob Branston are available for media interviews.

References
[1] https://www.gov.uk/government/publications/spring-budget-2024
[2] https://assets.publishing.service.gov.uk/media/65e80ba108eef600115a5621/Vaping_Products_Duty_Consultation.pdf
[3] Branston JR. Incredible profitability of the tobacco industry and potential of a profit cap. November 2023 https://ash.org.uk/uploads/Tobacco-wholesale-price-cap-potential.pdf?v=1699880744
BP operating profit margin 6.49% https://www.macrotrends.net/st...