It was announced the following changes will be made:
- Confirmed tobacco tax escalator of RPI + 2 per cent and RPI +12 per cent for hand-rolled tobacco
- Flat-rate tax of £2.20 per 10ml bottle of vape liquid, to be introduced from October 2026
- A one-off increase for tobacco tax in October 2026 to maintain the price differential with vaping and incentivise smokers to switch. This will raise the price of 100 cigarettes and 50 grams of hand-rolled tobacco by £2.20. This is estimated to be equivalent to the value of the tax on vape liquid.
Hazel Cheeseman, chief executive of Action on Smoking and Health (ASH), said, “Continued tobacco tax rises are necessary to encourage smokers to quit and reduce the burden of smoking on public finances and the economy in the future.”
“The vape tax aligns with recommendations we made to government regarding the importance of an excise tax and the necessity of it being a flat rate.”
She added, “An excise tax on vapes will reduce access to cheap products for children by both reducing affordability and creating more powers to tackle illegal imports. Border Force and HMRC have been central to the reductions in the illicit tobacco market and will be able now to play the same role on vapes.
“The one-off additional rise in tobacco tax alongside the vape tax is vital to maintain the price difference and the incentive for smokers to switch to the less harmful products.”
ASH has also advocated for a levy on tobacco companies, alongside other leading health organisations. Commenting on its absence from the budget, Hazel said, “The tax increases we’ve seen will be felt by customers, not the big tobacco companies. The chancellor could have raised an additional £700m through a levy structured to reduce their profitability and cap their prices. We hope this is an opportunity she will take in March 2025.”