Policy paper

Introduction of Vaping Products Duty from 1 October 2026

Published 26 November 2025

Who is likely to be affected

UK manufacturers of vaping products, importers of vaping products, retailers and wholesalers selling vaping products, packagers and distributors, stakeholders in the nicotine supply chain and consumers who buy and or use vaping products.

General description of the measure

Vaping Products Duty (VPD) is a new excise duty on vaping products.

The duty will apply to vaping liquid which contains nicotine and either or both glycerine and glycol or any liquid that is intended to be vapourised by a vape and is not a medical or tobacco product.

It will be charged on vaping products that are produced in, or imported into, the United Kingdom.

VPD will be charged a flat rate of £2.20 per 10 millilitres of vaping liquid, regardless of how much nicotine is contained in the product.

Policy objective

The government is committed to reducing the affordability and appeal of vaping products, particularly among young people and non-smokers, while maintaining the financial incentive for smokers to switch to less harmful alternatives.

VPD is being introduced to reduce the number of people taking up vaping, particularly non-smokers and young people, by reducing affordability.

The flat rate is intended to simplify calculations, reporting, and compliance for both businesses and HMRC, alongside reducing the risk of errors or disputes over product classification based on nicotine content.

Background to the measure

At Spring Budget 2024, the introduction of a new excise duty on vaping products was announced and a consultation was held on the design and structure of the duty. This was then confirmed at Autumn Budget 2024.

Following feedback gathered during the consultation, the previous tiered rates structure were replaced with a flat rate, to align with the majority of international counterparts and make VPD simpler to administer.

Primary legislation is included in Finance Bill 2025-26. Secondary legislation is anticipated to be laid in March 2026 to set out further details.

Detailed proposal

Operative date

The duty will take effect from 1 October 2026, with registrations opening on 1 April 2026.

Current law

There is currently no excise duty levied on vaping products — this is a new excise duty.

VPD will become part of the existing excise regime set out in the Customs and Exercise Management Act 1979 (CEMA).

Proposed revisions

There are no proposed revisions as this is a new excise duty.

Amendments will be made to various sections contained in CEMA and Finance Acts to recognise VPD as an excise duty and to give HMRC officers enforcement powers. Full details can be found in the schedules accompanying the VPD clauses.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
-50	+135	+400	+465	+530	+565

These figures are set out in Table 4.2 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Macroeconomic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

This measure will have an impact on an estimated 5.1 million individuals who vape by increasing the price of vaping products. Heavy vapers will face the highest burden from this measure. Another possible response is that individuals will respond to higher prices by moving to tobacco products. The government has announced a commensurate increase to tobacco duties that will take place when VPD is introduced.

This measure is not expected to impact on family formation, stability or breakdown.

This measure is not expected to impact individuals’ experience of dealing with HMRC, as it does not change any processes or tax administration obligations for individuals.

Equalities impacts

An individual may be affected by this measure regardless of their protected characteristics. Individuals from all protected groups are likely to be represented in the consumers of vaping products. If a protected group is overrepresented in this population, then it will be disproportionately impacted.

Males are estimated to be slightly overrepresented (55%) in the population that uses e-cigarettes on a daily or occasional basis, compared to their prevalence in the UK adult population (50%). People aged between 16 to 24, 25 to 34, and 35 to 49 are estimated to account for 20%, 22% and 25% of the daily or occasional e-cigarette user population and are overrepresented compared to the UK adult population (10%, 16% and 17% respectively).

HMRC does not currently hold data on other protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics.

By improving the traceability and legitimacy of products, the measure may indirectly support broader public health objectives aimed at reducing youth access to illicit vaping products.

Administrative impact on business including civil society organisations

The measure is expected to have a negligible administrative impact on an estimated population of 200 vaping product manufacturers and up to 750 importers and warehousekeepers who will now have to pay an excise duty on the products they make or import into the United Kingdom.

As this is a new duty, there is some uncertainty about the size of the taxpayer population. While the duty will increase their costs, it will be a decision for business if they pass these on to consumers, or if they absorb these costs themselves.

One-off costs will include businesses needing to familiarise themselves with their new obligations under the duty, businesses needing to register for the new duty and training staff as a result of the change.

Continuing costs will include businesses having to input the number of vaping products released for consumption to allow for the duty to be calculated.

It should be noted that the combined effect of VPD and the associated Vaping Duty Stamps (VDS) scheme is expected to be significant. Further information can be found in the VDS Tax Information and Impact Note.

This measure is expected overall to impact businesses’ experience of dealing with HMRC as the new duty requires additional tax administration tasks to be completed, for example seeking approval from HMRC and submitting regular monthly returns. To mitigate this, HMRC will provide clear guidance and communications to advise of the changes and support businesses with the new requirements.

This measure is not expected to impact civil society organisations.

Operational impact (£ million) (HMRC or other)

HMRC will incur estimated costs of £140 million to deliver this measure. This includes an estimated £20 million capital costs to develop an IT system for collecting the duty, and £120 million on resourcing and staffing costs between 2025 to 2026 to 2029 to 2030. This will support implementation of the change, monitor compliance and meet customer service needs.

There will also be up to £10 million available to Border Force, from existing HMRC budgets, to support preparation for VPD and to conduct a ‘test and learn’ exercise in the early months of the new duty. This will inform the future compliance approach at the border and associated funding requirements.

Other impacts

Justice Impact Test

In line with other excise duties, there will be civil penalties for failing to comply with VPD, including penalties for failure to register, failure to file returns and failure to pay the duty.

VPD will introduce several criminal offences with possible custodial sentences for non-compliance. The criminal offences in existing legislation for excise evasion and other fraudulent activity will apply as they do in other excise duties. A full Justice Impact Test has been completed, with the overall impact likely to be minimal.

Environmental

The introduction of the VPD is not expected to have significant direct environmental impacts. However compliance activity associated with the excise duty will cut down on illicit vapes, which are more associated with environmental harm.

Other impacts have been considered and none have been identified.

Health Impact

We expect Vaping Products Duty to have a significant positive effect on health outcomes. The Chief Medical Officer has been clear that those who do not already vape or smoke should not start.

This measure will increase the price of vaping products to reduce their affordability to young people and non-smokers. Recognising that vaping may play a role in helping smokers give up cigarettes, the duty on tobacco will be raised by an equivalent amount.

This ensures the incentive to switch is maintained. We expect the heaviest vapers to carry the largest burden, encouraging them to reduce their consumption and eventually quit.

Monitoring and evaluation

Consideration will be given to evaluating the impact and effectiveness of the Vaping Products Duty once sufficient data has been collected, particularly among young people and non-smokers. This will be in line with policy objectives and wider government aims of “Creating a Smoke-Free Generation.”

Further advice

If you have any questions about this change, contact the Vaping Product Duty Policy Team on email: vapingproductsduty@hmrc.gov.uk.