Changes to tobacco duty rates from 26 November 2025 and 1 October 2026
Published 26 November 2025
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Who is likely to be affected
Manufacturers, importers, distributors, retailers and consumers of tobacco products. Tobacco products include cigarettes, cigars, hand-rolling tobacco (HRT), other smoking tobacco and chewing tobacco, tobacco for heating and herbal smoking products.
General description of the measure
Tobacco duty rates will increase on 26 November 2025 by Retail Price Index (RPI)+2 percentage points and on 1 October 2026 the rates will increase by RPI+2 percentage points with an additional £2.20 per 100 cigarettes and £2.20 per 50g on all other tobacco products.
Policy objective
The government is committed to maintaining high tobacco duty rates. This is an established tool to reduce smoking prevalence and ensures that tobacco duties continue to contribute to government revenues. Duty rates will increase by RPI+2 percentage points on 26 November 2025.
Background to the measure
The increase of the duty rate on all tobacco products was announced at Budget 2025.
The tobacco duty escalator, which increases duty each year in line with the RPI +2 percentage points, was extended at Autumn Budget 2024 until the end of the current Parliament.
The government announced at Autumn Budget 2024 that alongside the introduction of the Vaping Products Duty (VPD) on 1 October 2026, a one-off additional increase will apply to tobacco duties to preserve the price differential between vaping and tobacco products. The one-off increase to tobacco duty will be £2.20 per 100 cigarettes and £2.20 per 50g of all other tobacco products, equivalent to the amount set for VPD which is £2.20 per 10ml of vaping liquids.
The government also committed at Autumn Budget 2024 to introducing a one-off additional increase on tobacco duties from the same time that the new VPD is introduced on 1 October 2026. This is aimed at ensuring the duty on vaping does not make smoking more attractive and preserves the incentive to choose vaping over smoking.
In order to minimise the administrative burdens and costs to business and HMRC, and avoid two consecutive tobacco duty increases in the autumn of 2026, the government will introduce legislation for both the one-off increase and the tax year 2026 to 2027 uprating in line with the escalator (forecast RPI+2 percentage points) in Finance Bill 2025-26, with both to be implemented from 1 October 2026.
Detailed proposal
Operative date
The 2025 to 2026 annual tobacco duty rates will take effect at 6pm on 26 November 2025.
The one-off increase to tobacco duties will take effect on 1 October 2026.
The 2026 to 2027 annual increase of tobacco duty rates will take effect on 1 October 2026.
Current law
The table on rates of tobacco products duty is in Schedule 1 to the Tobacco Products Duty Act 1979 (TPDA).
Proposed revisions
Legislation will be introduced in Finance Bill 2025-26 to implement the following:
- Annual tobacco duty rate increases for 2025 to 2026
- One-off tobacco duty rate increases for 2026 to align with the introduction of the VPD
Annual tobacco duty rate increases for 2026 to 2027.
The legislation will amend Schedule 1 to the TPDA and makes consequential changes to the simplified calculations contained within the Travellers’ Allowances Order 1994.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| +40 | +85 | +105 | +135 | +160 | +180 |
These figures were set out in the costing for ‘Tobacco Duty: Introduce a tobacco duty escalator of RPI +2% for the Parliament; increase duty on hand rolling tobacco a further 10% (RPI+12%) for 2024-25 from 30 October 2024; and a separate one-off duty increase to maintain financial incentive to choose vaping over smoking from 1 October 2026’ in Table 5.1 of Autumn Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2024.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will impact on individuals who smoke by increasing the price of tobacco products. Heavy smokers will face the highest burden from this measure. In response to higher prices, individuals generally choose to consume less.
For all tobacco types, evidence shows a significant negative relationship between price and quantities demanded. From 2019 to 2023, the tobacco escalator coincided with a reduction in estimated smoking prevalence from 14.1% to 11.9% of people aged 18 or over. Over the same period, estimated vaping prevalence has increased from 5.7% to 9.8% of people aged 16 plus.
As a result of this measure, we expect some consumers to switch from more expensive to cheaper tobacco products and that some may reduce tobacco consumption (partly by substituting to vaping). Some consumers might also engage in cross-border shopping and purchase from the illicit tobacco market. HMRC will monitor and respond to any potential shift in illicit consumption as part of its strategy to combat tobacco fraud.
The measure is not expected to impact on family formation, stability, or breakdown. Customer experience is expected to stay broadly the same as this measure only increases the price of tobacco products.
Equalities impacts
This measure is expected to have both positive and negative impacts on protected groups where smoking is more prevalent. People will experience a negative impact as a result of this measure as the cost of tobacco products will increase, however cost increases can disincentivise smoking resulting in a beneficial impact to health and finances.
An individual may be affected by this measure regardless of their protected characteristics. If a protected group is overrepresented in this population, then it will be disproportionately impacted. This measure is expected to impact on individuals who consume or purchase tobacco, as it will increase the cost of tobacco products.
Most smokers are aged between 25-64, with those aged 65+ being the most underrepresented and those aged 18-24 slightly underrepresented. Males are estimated to be overrepresented (57%) compared to their prevalence in the UK adult population (50%). Those from a White ethnic background are also estimated to be slightly overrepresented in the smoker population (90%) compared to the UK adult population (86%). In addition, those identifying as lesbian, gay, bisexual or other sexual orientation are estimated to be overrepresented in the smoker population compared to the UK adult population. There is some evidence to suggest that people with long-term mental health conditions are also more likely to smoke.
Where data was available for other protected characteristics no other notable differences were found.
Administrative impact on business including civil society organisations
This measure is expected to have a negligible administrative impact on fewer than 30 manufacturers and importers. They will face an increase in tobacco duty rates that they are likely to pass on to consumers.
There will be a negligible one-off cost to these businesses of familiarisation and amending systems to reflect the new rates. It is not expected there will be any continuing costs.
Customer experience is expected to stay broadly the same as this measure does not present a significant change for tobacco manufacturers and importers.
There is no impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
HMRC will need to make changes to IT systems to deliver this change, both at 26 November 2025 and at 1 October 2026. The estimated total costs for these are £60,000.
Other impacts
Health impact assessment
Any reduction in smoking prevalence will have a positive impact on health and reduce the cost to the NHS of smoking-related illness.
There may be reductions in other costs that arise from tobacco use. These costs include losses in productivity from smoking breaks and ill-health absences, the cost of cleaning up cigarette butts, the cost of smoking-related house fires and the loss in economic output from people who die from diseases related to smoking or exposure to second-hand smoke.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
Consideration will be given to monitoring this measure through information collected from tax receipts and kept under review as part of the annual Budget process.
Further advice
If you have any questions about this change, please contact the General Enquiries Helpline on Telephone: 0300 200 3700.