Tobacco giants exaggerate the size of Britain's illegal cigarette market threefold

New report reveals stark gulf between tobacco industry claims and official figures, as illegal cigarette consumption falls almost 90%

• Tobacco industry-funded research claims 45% of cigarettes smoked in the UK are illicit, compared with HMRC's official estimate of just 12%.
• The number of illicit cigarettes consumed annually has fallen by almost 90% since 2000, despite cigarette prices more than tripling.
• ASH warns that exaggerated claims about the black market are being used in an attempt to undermine tobacco taxes and new laws designed to create a smokefree generation.
• New report calls for tougher action against criminal retailers and organised crime, alongside continued efforts to reduce smoking.

Tobacco companies are exaggerating the scale of Britain's illegal cigarette market and using legitimate concerns about organised crime to lobby against tougher smoking laws and tobacco taxes, according to a new report from Action on Smoking and Health (ASH).

The report, Beyond the headlines: the reality of illicit tobacco in the UK, reveals a striking gulf between official government figures and research funded by tobacco manufacturers.

A 2026 report commissioned by Philip Morris International (PMI) estimated that 45% of cigarettes consumed in the UK were illicit [1], compared with HMRC's official estimate of just 12% in 2024–25 [2]. Japan Tobacco International (JTI) has separately claimed that 42% of cigarettes and 61% of hand-rolling tobacco consumed in the UK are illicit [3], compared with HMRC estimates of 12% and 19% respectively.

The claims come despite official figures showing that the number of illicit cigarettes consumed in Britain has fallen by almost 90% since 2000, from 15.1 billion cigarettes a year to 1.9 billion in 2024–25.

Over the same period, the price of cigarettes has more than tripled [4] and smoking rates have fallen dramatically [5]. The UK has achieved this progress through a combination of sustained tobacco tax increases, effective enforcement and measures to reduce smoking.

The findings directly challenge repeated warnings from tobacco manufacturers that higher taxes and the government's smokefree generation policy will fuel an explosion in illegal tobacco sales.

Industry-funded research under scrutiny

The report raises serious questions about the reliability of research commissioned by tobacco manufacturers and the way its findings are presented to politicians and the public.

The PMI-commissioned KPMG reports have been criticised by independent researchers for methodological weaknesses, including reliance on discarded cigarette pack surveys and unverified tobacco industry information.[6]

ASH's report also identifies a striking discrepancy in estimates of total tobacco consumption. The latest KPMG report suggests that 22.6 billion manufactured cigarettes were consumed in the UK in 2025, substantially more than estimates based on representative national surveys.

The PMI-KPMG figures imply levels of smoking substantially higher than those recorded by national surveys, raising further questions about the reliability of their estimates.

Despite these concerns, tobacco industry-funded figures have been widely reported in the media and repeated by parliamentarians during debates on the Tobacco and Vapes Act.

The report documents how tobacco manufacturers have funded research, sponsored parliamentary events and worked through third-party organisations to amplify claims that the illegal tobacco market is booming and will worsen as a result of new regulations.

A 25-year success story hidden behind scare stories

The report finds that Britain's experience directly contradicts the tobacco industry's argument that higher tobacco taxes inevitably drive illicit trade.

Since 2000–01:

• The number of illicit cigarettes consumed annually has fallen from 15.1 billion to 1.9 billion.
• Illicit hand-rolling tobacco consumption has fallen by 81%.
• The estimated annual loss of tobacco duty to illicit trade has fallen from around £5 billion to £1.3 billion in today's prices.
• Smoking prevalence has fallen from around 27% to below 10%.

This progress has been achieved while tobacco taxes have risen substantially, helping to make cigarettes less affordable and encouraging millions of people to quit.

The report concludes that the UK has demonstrated how high tobacco taxes, strong regulation and effective enforcement can work together to reduce both smoking and illicit tobacco sales.

Hazel Cheeseman, Chief Executive of Action on Smoking and Health (ASH), said:

"For years tobacco companies have been telling politicians and the public that Britain's illegal tobacco market is spiralling out of control. The official figures tell a very different story. Illegal cigarette consumption has fallen by almost 90% since 2000, even as tobacco taxes have risen and smoking rates have tumbled.

"The tobacco industry has a long history of using the threat of illicit trade to argue against measures that would reduce smoking. Now we are seeing industry-funded research suggesting a black market three times larger than official estimates, with those claims finding their way into newspapers and parliamentary debates.

"That doesn't mean the problem has gone away. Criminals are still profiting from illicit tobacco, and we need strong enforcement to stop them. But we should not allow tobacco companies to use exaggerated claims about the black market to frighten politicians away from policies that save lives.

"Britain has shown that you can raise tobacco taxes, reduce smoking and drive down illegal tobacco sales at the same time. The best way to reduce the illegal tobacco trade is to reduce demand with fewer people smoking."

John Herriman, Chief Executive of the Trading Standards Institute, said: 

"Illicit tobacco is a serious problem. It fuels organised crime, harms legitimate businesses and puts cheap cigarettes into the hands of children. Trading Standards officers see the damage it causes in communities every day.

"But the idea that Britain's illegal tobacco market is spiralling out of control simply isn't supported by the evidence. We've made enormous progress over the last 25 years, showing what sustained enforcement and strong tobacco regulation can achieve together.

"We need to build on that success, not undermine it. That means giving Trading Standards the resources and powers to tackle rogue retailers and criminal networks, including stronger shop closure powers and retail licensing. The answer to illicit tobacco is effective enforcement, not weaker tobacco laws."

Dr Allen Gallagher, Co-Director of the Tobacco Control Research Group, University of Bath, said:

"The tobacco industry has a long history of funding research that exaggerates the scale of illicit trade and using the findings to argue against tobacco taxes and regulation.

"The gap between industry-funded estimates and official HMRC figures is striking. These are not simply different interpretations of the same data. There are serious methodological questions about how industry estimates are produced, including their reliance on discarded cigarette packs and assumptions about tobacco consumption that are difficult to reconcile with national smoking surveys.

"The UK provides powerful evidence that higher tobacco taxes and stronger regulation do not inevitably lead to more illicit trade. Politicians and journalists should be extremely cautious about accepting tobacco industry claims at face value, particularly when those claims are being used to challenge measures that reduce smoking."

Catherine Taylor, Regulation Manager at Fresh and Balance and co-ordinator for the Illicit Tobacco Partnership, said:  

“The UK has made significant progress in reducing the size of the illegal tobacco market and HMRC’s national figures speak for themselves with 13 million fewer illegal cigarettes being smoked than 25 years ago.

 “In that time we’ve seen the establishment of some really successful partnerships to drive down the illegal trade: across the North of England, health and regulatory partners have worked together for many years to reduce both supply and demand as part of our broader programmes to reduce smoking rates.

 “Sustained tracking data – including from surveys in the North East of England – clearly show that people’s use of both legal and illegal tobacco is coming down year after year, but much more still needs to be done, especially in communities where smoking rates remain high, if we are to finally achieve the goal of ending smoking.”

Stronger enforcement still needed

ASH warns that the illicit tobacco market remains a serious problem, funding organised crime, undermining public health and depriving the Treasury of revenue.

Although the overall volume of illicit tobacco remains historically low, recent surveys suggest that the proportion of smokers reporting purchases of illicit products has increased.[7]

The report calls on the government to build on the UK's successful approach by:

• Maintaining investment in national and local illicit tobacco enforcement.
• Introducing a comprehensive tobacco retail licensing scheme, with tough penalties for retailers selling illicit products or selling to children.
• Strengthening powers to close shops involved in illegal tobacco sales.
• Restoring Trading Standards funding and improving coordination with police and organised crime agencies.
• Continuing to reduce demand for both legal and illegal tobacco through effective stop smoking support and the implementation of the smokefree generation policy.

ASH modelling suggests that reducing smoking prevalence to 1% by 2040 could shrink the illicit tobacco market by around 90%, assuming the proportion of illicit tobacco consumed remains unchanged.

ENDS

Notes to editors

About ASH

Action on Smoking and Health (ASH) is a public health charity working to eliminate the harm caused by tobacco.

1. About the report

Beyond the headlines: the reality of illicit tobacco in the UK is published by Action on Smoking and Health (ASH). It examines official data, independent research, regional surveys and tobacco industry-funded estimates to assess the scale of the illicit market and the effectiveness of the UK's response.

Report available at: https://ash.org.uk/resources/view/beyond-the-headlines-the-reality-of-illicit-tobacco-in-the-uk

2. Comparing illicit tobacco estimates

HMRC estimates that 12% of manufactured cigarettes consumed in the UK in 2024–25 were illicit. The PMI-commissioned KPMG 2026 report estimates that 45% of manufactured cigarettes were illicit in 2025. These estimates relate to different periods and use different methodologies.

HMRC's estimates are produced using national smoking and consumption data alongside information on legal tobacco sales. Industry-funded estimates often rely heavily on discarded cigarette pack surveys and unverified industry data.

3. Long-term trends

According to HMRC's June 2026 Measuring Tax Gaps statistics, annual illicit manufactured cigarette consumption declined from 15.1 billion in 2000–01 to 1.9 billion in 2024–25. Illicit hand-rolling tobacco consumption fell from 5.9 million kg to 1.1 million kg over the same period.

4. Tobacco industry involvement in illicit trade

The report also examines the tobacco industry's historical involvement in cigarette smuggling and its use of concerns about illicit trade to lobby against tobacco control policies.

References

[1] PMI. KPMG report reveals: almost half of UK cigarettes pay no tax. June 2026.

[2] HMRC. 3. Tax gaps: Excise (including alcohol, tobacco and oils). June 2026.

[3] Corbin T. ‘Tax gap’ estimate is ‘deeply flawed’, says JTI. Talking Retail. June 2026.

[4] ONS. RPI: Ave price - Cigarettes 20 king size filter. June 2026.

[5] ONS. Adult smoking habits in the UK: 2025. October 2026.

[6] Gilmore AB et al. Towards a greater understanding of the illicit tobacco trade in Europe: a review of the PMI funded ‘Project Star’ report. Tobacco control. 2014 May 1;23(e1):e51-61.

[7] UCL. More smokers are buying tobacco from illicit sources. July 2026.