Nicotine Approval Scheme: detailed design and implementation

Question 1

Summary

Accepted Answer

Subject of this consultation

This consultation seeks views on the detailed design of a Nicotine Approval Scheme (NAS).

The scheme will introduce controls on specified activities involving high strength nicotine to reduce the risk of illicit vaping product manufacture and protect Vaping Products Duty (VPD) Revenue.

Scope of this consultation

In April 2025, the government announced its intention to introduce controls on the supply of nicotine through a NAS.

This consultation seeks views on how the scheme should operate, and how it can be made effective, proportionate and deliverable.

This consultation will also help to determine the legal definitions of the products that fall within the scheme, including high strength nicotine.

This consultation does not seek views on whether controls on high strength nicotine are needed.

Who should read this

Individuals or organisations interested in the policy scope and who feel they may be affected by the scheme or have a particular interest in the vaping and wider nicotine industries.

Duration

The consultation will run for 12 weeks, starting 28 October 2026 and ending 20 January 2027.

How to respond or enquire about this consultation

Responses to or queries about this consultation can be sent by email to vapingproductsduty@hmrc.gov.uk or by post to:

Vaping Policy Team
Fourth Floor West
Trinity Bridge House
2 Dearmans Place
Salford
M3 5BS

Additional ways to be involved

HM Revenue and Customs (HMRC) will also be engaging with industry forums to gather views.

After the consultation

Responses will be considered in refining the design of the scheme and the government will then publish a formal response document.

Question 2

1. Executive summary

Accepted Answer

The case for a Nicotine Approval Scheme

VPD came into force on 1 October 2026. It applies to vaping liquids produced in or imported into the UK.

The introduction of VPD creates a potential incentive for illicit domestic manufacture of vaping products. This risks undermining VPD revenue, placing compliant businesses at a competitive disadvantage and increasing opportunities for criminal activity within vaping product supply chains.

In its response to the technical consultation on compliance measures for VPD, the government announced its intention to introduce a NAS. The objective of the scheme is to reduce opportunities for illicit domestic manufacture by introducing controls on the supply and handling of high-strength nicotine, reducing the risk that compliant businesses are undermined by illicit operators.

Proposed approach

The government is consulting on the design of a NAS, under which businesses and individuals would require HMRC approval before carrying out specified activities. These activities would involve high-strength nicotine above a defined concentration threshold, unless an exemption is applied.

The consultation seeks views on:

the proposed nicotine concentration threshold at which controls will apply
the forms of nicotine within scope of the scheme
the activities that will require approval, such as purchasing, importing, supplying, storing and transporting high-strength nicotine
whether any exemptions should apply where the risk of diversion is low
the approval process, including eligibility requirements and fit and proper checks
record-keeping requirements and supply chain due diligence obligations
the enforcement framework, including penalties for non-compliance

The government is also seeking evidence on the potential impacts of the scheme, including the number and types of persons likely to be affected, current business practices, and the likely administrative and compliance costs.

Purpose of this consultation

The government aims to design a scheme that is effective in tackling illicit domestic manufacture of high-strength nicotine, while remaining proportionate and workable for affected businesses and individuals.

Responses to this consultation will inform decisions on legal definitions, the final policy design, impact assessment and future legislation required to implement a Nicotine Approval Scheme.

Question 3

2. Introduction

Accepted Answer

Nicotine Approval Scheme

VPD came into force on 1 October 2026. It applies to all liquids intended for use in vaping products, including nicotine-free. It is supported by robust compliance measures, including controls applying to legitimate manufacture and importation.

Through consultation, it was identified that increased activity required to enforce VPD could incentivise the illicit manufacture of vaping products. Illicit domestic manufacture could reduce tax receipts, place compliant businesses at a competitive disadvantage and create wider concerns where products are made in uncontrolled conditions.

A NAS would place controls on the supply of nicotine and enable better regulation of the domestic vaping market. High-strength nicotine has a narrower range of legitimate uses and is used in the manufacture of many nicotine-containing vaping products. It is therefore considered a more targeted point at which additional controls could be applied. Nicotine products referred to in this consultation will be taken to include vaping products.

In October 2024, the government invited views on nicotine supply as part of a technical consultation on VPD compliance measures. In April 2025, the government announced it would introduce a NAS and consult further on policy design.

Objectives

The scheme aims to protect VPD revenue by reducing opportunities for illicit domestic manufacture. It intends to protect legitimate businesses from being undermined by illicit competitors and aims to improve HMRC’s understanding of the high-strength nicotine supply chain.

Scope of this consultation

Respondents are invited to provide evidence for consideration on the proposed nicotine threshold, controlled activities, exemptions, application information, approval conditions, records, due diligence, duration of approval, penalties, safeguards and implementation.

Respondents are encouraged to identify alternative approaches where these would achieve the objectives more effectively or with lower burdens. Evidence about unintended consequences, affected sectors and existing commercial or regulatory controls is also welcome.

Question 4

3. Scope of the scheme

Accepted Answer

Nicotine strength threshold

A NAS would apply to specified activities involving nicotine above a defined strength. A threshold is needed to distinguish the high-strength nicotine used as a manufacturing input from finished consumer vaping products and other lower-strength nicotine products.

The government proposes that the scheme should apply to nicotine with a concentration above 50 milligrams per millilitre.

Finished consumer vaping products cannot be sold legally with a nicotine concentration above 20 milligrams per millilitre as per 36(4) of the Tobacco and Related Products Regulations 2016. A threshold above 50 milligrams per millilitre would create a clear distinction between finished consumer products and higher-strength nicotine that may be used as an input in manufacturing.

Question 1: What impacts would a 50 milligrams per millilitre threshold have if implemented in a NAS? Please explain your answer, providing evidence about the products, activities and businesses that would be affected and details of any potential avoidance risks or other unintended consequences. If you are a manufacturer, what strengths of nicotine does your business or organisation purchase, import, supply, hold, transport or use, and for what purpose?

Forms of nicotine

Nicotine can be supplied in different forms. These include freebase nicotine, nicotine salts and synthetic nicotine. Alternative forms may also emerge as product and manufacturing methods develop.

A scheme limited to one form of nicotine could be circumvented if businesses or illicit manufacturers moved to another form capable of being used for the same purpose.

The government therefore proposes that a NAS should apply to relevant forms of nicotine above the specified threshold, including freebase nicotine, nicotine salts, and synthetic nicotine.

Question 2: What are the potential impacts of applying a NAS to all relevant forms of nicotine capable of being used in the manufacture of vaping products?

Question 3: Are there any forms of nicotine or comparable substances that should be specifically excluded from the scheme?

Controlled activities

Activities within the nicotine supply chain

A NAS must identify the activities involving high-strength nicotine for which HMRC approval would be required. Applying the scheme only at the point of vaping product manufacture would not provide visibility of high-strength nicotine as it enters and moves through the UK supply chain.

High-strength nicotine may be imported, purchased, sold, supplied, stored or moved several times before it reaches a manufacturer. If any activities took place outside the scheme, nicotine could move through the supply chain with limited oversight before being diverted to illicit production.

The government therefore proposes that a business or individual carrying out the following activities involving nicotine above the specified threshold will require approval unless an exemption applies:

purchase
importation
sale or supply
holding or storage
movement or transportation

These will be referred to throughout this document as ‘controlled activities’.

Purchase and importation are key points where high-strength nicotine enters an individual’s possession or the UK supply chain. Requiring approvals from the purchaser or importer would help the government understand who is obtaining nicotine and why. Approved suppliers could be required to verify that purchasers are approved or exempt before completing a transaction. Importers of nicotine could be required to provide evidence of NAS approval on request.

Controls on sale or supply are intended to reduce the risk of high-strength nicotine being provided to an individual who has no legitimate reason or authority to receive it. The term ‘supply’ may need to extend beyond a conventional sale so that transfers without payment, transfers between associated businesses and other changes in possession cannot be used to avoid the scheme. The detailed treatment of returns, samples, waste, transfers between premises belonging to the same person and supplies outside the UK will need to be developed further.

Persons involved in the holding and storage of high-strength nicotine may have physical control of it even where another person retains legal ownership. Including holding and storage would therefore improve visibility of warehouse operators and other persons responsible for nicotine while it is awaiting use or onward supply. Approval conditions could cover stock records, secure storage, authorised access, unexplained losses and ownership of held nicotine.

Movement is a further point at which nicotine could be lost or diverted and is therefore proposed as a controlled activity. The government recognises that applying full approval requirements to every carrier could create disproportionate burdens. Chapter 6 considers a possible conditional exemption for specified transport and logistics activities.

Question 4: Are there any reasons why the proposed list of controlled activities may be unworkable? Please explain your answer and provide details if you believe any activities should be excluded or subject to a different form of control.

Question 5: Are there any additional activities involving high-strength nicotine that should require approval? Please explain your answer.

General approach to exemptions

Principles governing exemptions

A NAS is intended to provide effective oversight of high-strength nicotine without imposing unnecessary regulation on legitimate activities. A limited number of exemptions may therefore be appropriate where there is a clear and evidenced reason, the risk of diversion is low, or another regulatory framework already provides comparable assurance.

An exemption would be subject to strict conditions. These might include restrictions on the quantity handled, the persons between whom nicotine may be supplied, its permitted use, the records retained and any onward supply.

Interaction with existing HMRC approvals

Some businesses affected by a NAS may already be approved by HMRC under VPD or another excise regime. Examples could include approved vaping product manufacturers and persons holding relevant excise approvals.

Requiring a business to repeat checks and provide information that HMRC already holds could create additional administrative burdens. The government therefore proposes that equivalent information and checks should not be duplicated where they remain current and relevant.

However, existing approval under another HMRC regime would not necessarily provide an automatic exemption from NAS. Handling high-strength nicotine may create risks or require information that is not addressed by the existing approval.

HMRC will consider streamlining the NAS application process for businesses already approved under VPD.

Specific exemptions

Transport and logistics

High-strength nicotine may be moved by transport and logistics providers that do not own the goods or determine how the goods will ultimately be used. The government is considering how these providers should be treated under a NAS.

Movement and transportation are proposed controlled activities because nicotine may be lost or diverted while in transit. Requiring the person moving the goods to be approved could give HMRC greater visibility of the nicotine supply chain and establish clear responsibilities for security and record-keeping during transport.

However, transport providers may move goods solely on behalf of an approved supplier or customer without having a wider commercial role in the transaction. Requiring every carrier to obtain full NAS approval could therefore impose requirements that do not reflect the carrier’s role.

The government proposes to exempt carriers where they act solely on behalf of persons who are approved or exempt under NAS. The approved consignor and consignee would retain responsibility for ensuring that the movement is legitimate and appropriately documented. The carrier would still be required to retain specified information and make it available to HMRC.

HMRC may include requirements relating to the identity and approval status of the consignor and consignee, the quantity and strength of the nicotine, collection and delivery locations, proof of delivery and the reporting of loss or diversion.

Question 6: For what reasons may a business require an exemption? Please provide details, including views on any impacts of the conditions noted above and if any other conditions should apply.

Question 7: Are there other sectors or activities for which an exemption should be considered? Please explain the reason and the conditions that should apply.

Question 8: Who should be responsible for confirming that a movement is legitimate? What records could be provided to HMRC to evidence this?

Question 9: Are there any potential supply-chain effects, compliance risks or unintended consequences of the proposed approach? Where possible, please provide evidence.

Medicinal nicotine products

Nicotine is used in medicinal products intended to support smoking cessation. These may include authorised nicotine patches, sprays, gum, lozenges and inhalers.

The government is not proposing an exemption for controlled activities involving nicotine used in the manufacture or supply of medicinal product, to ensure that the scheme is comprehensive and minimise opportunities for abuse.

Question 10: What would be the impacts of controlled activities involving nicotine used in the manufacture or supply of an appropriately authorised medicinal product coming to scope of a NAS? Please explain your answer.

Academic, scientific and testing activities

The government is proposing an exemption for small-scale academic, scientific, analytical and testing activity that is not connected with the commercial manufacture or supply of nicotine products. This would be subject to conditions covering secure storage, records of acquisition and use, restrictions on onward supply and use only for the stated research, analytical or testing purpose.

HMRC will impose an annual quantity limit for this type of activity.

Commercial research and development connected with nicotine-product manufacture would remain within a NAS. A business using high-strength nicotine to develop or refine nicotine products for commercial supply would require approval unless another exemption applied.

Question 11: What annual quantity limit would be appropriate for this type of activity?

Conditions of approval

NAS approval will be subject to general conditions applying to all approved persons and additional conditions reflecting the activities undertaken.

General conditions will require an approved person to keep prescribed records, provide an approval number to suppliers, deal only with approved or exempt persons where required, notify HMRC of material changes to their business and maintain arrangements to prevent loss or diversion. Activity-specific conditions may also apply and will reflect different risks, as importers, manufacturers, distributors and warehouse operators may require different information and controls.

Duration, recertification and changes to approval

The government proposes that initial NAS approvals should last for 12 months, allowing HMRC to monitor compliance and evaluate the effectiveness of approval conditions.

An approved person will be required to confirm that business details remain accurate, controlled activities have not materially changed, premises, suppliers and customers remain current, quantity estimates have been updated, and the fit and proper requirements continue to be met.

A more comprehensive review may be required where there has been a material change in ownership, premises or activities, a significant change in nicotine quantities, or evidence of non-compliance.

HMRC will suspend or revoke an approval where the person no longer satisfies the conditions, ceases to be fit and proper or commits serious or repeated breaches. Appropriate notice, review and appeal arrangements would apply.

Question 12: Should approval conditions vary according to the controlled activity? If so, how?

Question 13: Do you agree that NAS approvals should initially last for 12 months and be renewed through a simpler recertification process? Should compliant persons be eligible for longer approval periods once the scheme is established?

Records and due diligence

Record-keeping

The government proposes that approved persons should maintain records of high-strength nicotine purchased, imported, supplied, held, used and moved.

Those records could include the date of the transaction, product description, quantity, nicotine strength, supplier, customer details, relevant approval numbers, collection and delivery details and intended use.

Stock records could be required to show opening stock, acquisitions, use, disposals, movements, losses and closing stock. The degree of detail should be proportionate to the activity and risk.

The government intends to build on existing commercial records rather than prescribe a separate format where a business’s systems already contain the required information.

Due diligence

The government proposes that the approved supplier should be required to take reasonable and proportionate steps to establish that a customer is entitled to receive high-strength nicotine and that the proposed transaction is consistent with a legitimate activity.

The government will consider what steps a business should take if checks cannot be completed or causes concern, including whether the transaction should be delayed or refused and whether information should be reported to HMRC.

Question 14: What records do businesses and organisations already retain in relation to high-strength nicotine? What additional information would NAS require, and how long should records be retained? Please explain your answers with evidence.

Question 15: What information or functionality would businesses need from an HMRC approval-verification service?

Penalties, enforcement and safeguards

Enforcement framework

A NAS requires an effective enforcement framework so that persons cannot gain a commercial advantage by operating without approval or failing to comply with the scheme.

The government is proposing penalties where a person carries out a controlled activity without approval, breaches an approval condition, fails to satisfy the requirements of an exemption, supplies a person who is not approved or exempt, fails to retain required records or provides false or misleading information.

HMRC will consider options for forfeiture of relevant materials and equipment as part of the enforcement framework. The response will be proportionate to the nature and seriousness of the contravention.

Fixed and variable penalties

Fixed penalties will be used for specified administrative failures and variable penalties for contraventions involving a greater risk to revenue or the integrity of the nicotine supply chain.

Variable penalties will take account of the quantity of nicotine involved and the potential excise duty revenue at risk. This could strengthen fixed penalties by ensuring they are not treated as a cost of carrying on unauthorised activity.

The level of a penalty will distinguish between careless, deliberate and repeated behaviour.

Safeguards

The penalties and approval framework would include appropriate safeguards, including provisions for reasonable excuse, HMRC discretion in special circumstances, written notification of decisions, internal review and appeal to an independent tribunal.

Question 16: What would be the impact of the proposed safeguards? Please explain your answer and identify any further safeguards that should apply.

Implementation

Proposed timetable

The government proposes to implement the NAS from April 2028, subject to the outcome of the consultation.

Businesses will need to identify whether they fall within scope, gather application information, change contracts and supply arrangements, update stock and transaction records, introduce customer checks and train staff. The government will allow sufficient time for these activities to take place between policy confirmation and the scheme taking effect.

Guidance and digital services

HMRC will publish guidance before the scheme commences. The guidance will explain which persons and activities are within scope, how to apply, how exemptions operate, what records and checks are required, and what an approved person must do when circumstances change.

The scheme will also allow suppliers and other relevant persons to verify whether a business is approved. The amount of information displayed will balance usability, commercial confidentiality and data protection.

The government will use consultation evidence to inform the application process, guidance, verification arrangements and the lead-in period. This may include targeted engagement with some stakeholders outside of this formal process.

Question 17: How much time would affected businesses need between publication of the final requirements and scheme commencement?

Question 18: Should applications open before commencement, and what transitional arrangements would existing businesses need?

Question 5

4. Assessment of impacts

Accepted Answer

Exchequer Impact

Year	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
Exchequer impact (£m)	+/- -	+/- -	+5	+5	+5	+5

Summary of impacts

Impacts	Comment
Economic impact	This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families	The proposed scheme would primarily affect businesses and other persons carrying out controlled activities involving high-strength nicotine.
Equalities impacts	A future NAS would primarily affect businesses and other persons undertaking controlled activities involving high-strength nicotine. HMRC does not currently hold data on the protected characteristics of the business owners, employees or private individuals who may ultimately fall within scope. Under the current proposal, requirements would apply according to the activities undertaken and the strength of nicotine handled, rather than by reference to any protected characteristic. No evidence has been identified at this stage that the proposed scheme would affect individuals differently because of a protected characteristic.
Impact on businesses and Civil Society Organisations	A future scheme may require affected businesses to obtain approval, complete fit-and-proper checks, conduct due diligence and keep specified records. These requirements could generate one-off and continuing costs and may have a significant administrative impact on businesses within scope, including small businesses. The consultation will therefore gather evidence on affected sectors, business numbers, existing commercial practices, likely costs, small-business impacts and options for minimising unnecessary burdens. No direct impact on civil society organisations has been identified at this stage.
Impact on HMRC or other public sector delivery organisations	Implementing the scheme would require an approval process and compliance activity, potentially involving additional staff resources and IT capability. The scale and cost of these requirements will be informed by consultation responses. A comprehensive assessment of operational impacts and costs will be completed before implementation.
Other impacts	Potential wider impacts will be considered as part of reviewing consultation responses.

Question 6

5. Summary of consultation questions

Accepted Answer