The UK government is considering announcing a new tax on vapes in the upcoming budget next week. Unlike tobacco, vapes are not subjected to a dedicated levy, the products are currently just subjected to VAT. reports are saying that at the budget, tobacco duty may also increase, ensuring that vaping remains a cheaper alternative. However, the ministers fear that this relatively low cost and tax on vaping means that vaping products are more affordable and accessible to non-smokers, and worse, to young people. The government first said that it is considering a vaping levy, citing a “significant differential” with tobacco tax at November’s King’s Speech. Now according to The Times, which was also the first organization to report on this, this new duty will be levied on the liquid in vapes. This will come with higher tax rates for products containing more nicotine.

Treasury analysis also suggests that the new vaping tax, combined with the rise in tobacco duty can approximately raise almost £500m a year. As part of the Autumn Statement, the separate tax on tobacco products was raised by 2% more than inflation last year. So the Official economic forecasts predict that tobacco duty is set to rise around £10.4bn this year, mainly due to the higher rate. Now vaping products along with non-tobacco nicotine are being taxed at 20% VAT. For e-cigarettes regulated as medicines, the rate is even lower, just 5%. The government is also holding a “swap to stop” scheme in England to encourage smokers to leave tobacco. In this scheme, traditional smokers can get free vaping “starter packs”, helping them quit smoking.

This way of adult smokers quitting tobacco is also recommended by the NHS. The recommendation says that vaping is “not completely harmless”, but surely is “substantially less harmful”. Many European countries now have e-cigarette taxes. The European Commission is also planning to introduce a minimum level across the EU. The UK Vaping Industry Association which is an industry body for vape manufacturers commented that a new tax will also “penalize” smokers who have switched from their traditional tobacco to e-cigarettes. Its director general, John Dunne also stated that this new law will impact its accessibility to smokers in the poorer areas with some of the highest smoking rates.

At the same time, he also argued that this new law could easily “fuel a black market which is already in danger of being out of control”. This plan came after it was announced to deliver a UK-wide ban on disposable vapes last month. The plan also included restrictions on flavors along with how they are packaged. The UK government ministers who were responsible for delivering the ban in England, say that they hope to pass the relevant legislation prior to the next election. If this happens, the ban would then start in early 2025 and the realtors will be given six months to make the necessary changes once the timing is confirmed. In the same budget, the UK government is also planning to increase fines for retailers who sell vapes to people under 18 years old.