The UKs Vape Tax Explained

Following continuous media coverage of disposable vapes and their effect on the environment as well as the enormous rise in youth vaping, the government looks to tackle the issues by introducing a tax against vape liquid. At this point in time, we’re unsure if the tax will be levied against nicotine-containing-liquid or all liquids intended for use as E-Liquids, which could cover DIY liquids such as Hackshots, Concentrates and VG/PG etc. The government claims that the tax will be incurred against nicotine-containing E-Liquid, but as it’s early days there’s still lots of room for change.

As of May 2024 the government wants to impose a staggered tax rate on nicotine liquids above and below 11mg. For liquids over 11mg the tax will come in at £3 per bottle, and £2 per bottle for liquids under 11mg. This may sound like a relief for those of you using lower strength E-Liquid, but you’ll actually get less bang for your buck. Someone vaping 9mg liquid will pay the same tax as someone using 3mg liquid, but will get 3 x as much nicotine for the £2 tax they will have paid.

What if I only vape 0mg E-Liquids? That’s being taxed too! E-Liquids without nicotine will be taxed at £1 per bottle, and each tax vape tax is applied before VAT so it’s even worse than it sounds.

What does the vape tax mean for the industry?

Put simply: vaping is going to be much more expensive. Our government disguises the tax as an effort to reduce youth vaping when really it is a tax-grab. As the tobacco industry is declining (and so too is the governments tax income), a new means of taking your hard-earned money comes in the form of a vape tax.

You might think that the new tax will increase the cost of your E-Liquid by £1, £2 or £3 (for 0mg, <11mg and >11mg respectively) but you’d be wrong. Manufacturers will need to produce taxed products in specific bonded warehouses in order to comply with pertinent tax-regulations. This means an increase in production costs, so not only does the tax add up to £3 per bottle, it indirectly incurs extra production costs.

Why Is The Government Introducing a Tax?

In their own words, it’s all about tackling youth-vaping. As we mentioned earlier, this is just a trojan horse for generating more tax income. Earlier in the year we saw news articles about a ban on disposable vapes. This would have been sufficient in itself to reduce (dramatically) if not kill youth vaping outright. After all, it’s thanks to disposable vapes that we now even have a youth vaping crisis.

In any case, lets assume the government doesn’t have an alternate agenda (not likely) and look at the statistics behind the effects of taxation on consumer goods.

Firstly, the government argues that a tax levy reduces affordability, which is obviously true. Raising the prices of consumer goods means fewer people can afford to buy them, so a reduction in their use can be seen. The WHO (The World Health Organisation) claims the same: significantly increasing tobacco excise taxes and prices is the single most effective and cost-effective measure for reducing tobacco use“. This is just unfair on those who can’t afford to continue buying them and a minor nuisance for those who can. It’s also a completely unnecessary step and more proof of the governments greedy tax-grabbing habits.

According to our trusty goverment’s website:

  • total tobacco receipts for the last complete financial year, 2022 to 2023, were £10,004 million, which is £274 million (3%) lower than the previous financial year


Figure 1:

Tobacco Duty Tax Receipts in the UK from 2013 to 2023

Figure 1 demonstrates several trends for tobacco receipts by product type, with the most important being a general but slight downward trend following on from 2016, with the current highest total in the year ending 2022.

According to the governments page on tobacco statistics, the total tobacco receipts for the last complete financial year (2022 to 2023) were £10,004 Million, which is a reduction of 3% on the previous financial year.

What this information doesn’t demonstrate is the exact reason for the reduction. Is it because of the tobacco tax? Could it be the rise in the cost of living? Or maybe it’s something else? Maybe there’s a replacement for smoking which delivers nicotine in the same manner, but without the carcinogens, tar and the huge list of dangerous chemicals present in cigarettes? Could it be vaping? Who would have thought that the single most effective smoking cessation could have an effect on…. smoking.

Regardless, vaping is the worlds greatest weapon against smoking and our government is about to stamp it out because they haven’t the wherewithal to fix underlying societal and legislative issues instead. The vaping tax is quite simply another band aid trying to fix a minor issue which can be solved by banning disposables outright.

What will happen to the Vaping Industry Post-Taxation?

Many small businesses will have to close their doors for good as they won’t be able to handle the increased cost of production. UK manufacturing will shrink even more than it already has leaving only the giants to have a market monopoly, including the Chinese giants like Elf Bar. Initiatives to increase UK manufacturing are nowhere to be seen and a heavy reliance on imported goods is inbound.

Many vapers will simply return to smoking and the graph above will revert to show an increase on the previous year. The government’s approach to the smoking crisis is laughable – the solution is already here and they want to kill it with their typical trigger-happy tax policy.

The pockets of those who continue vaping will get lighter as they have to spend more for the same volume of E-Liquid, perhaps forcing them to vape less with lower-power devices, but most notable is the possibility, no, inevitability of black markets.

The UK’s population has little trust in it’s government and is wholly unhappy with it for a host of reasons. The relentless imposition into the average persons daily life is exhausting and a vape tax is another proverbial chip in one’s armour to continue trundling along. Prohibition is always a slippery slope and comes with consequences, something the government has clearly swept under the rug in order to blanket-tax an entire industry.

Opportunists and DIY enthusiasts will turn back to DIY products, buying E-Liquid ingredients separately and mixing themselves to avoid paying an unnecessary tax. Unfortunately, many will do it improperly, buying unsafe ingredients which could be harmful – and quite seriously. Some of the more entrepreneurial individuals will undoubtedly sell their crafty DIY E-Liquids to friends and family, and could attempt to expand in an effort to make more money. Since the authorities can only enforce the law so far, many will go under the radar just long enough to do damage.

If the current age restrictions against smoking and vaping cannot be enforced, how can a tax be enforced? Is it because of higher penalties? If that were the case, wouldn’t the answer to the problem be raising penalties for selling to minors?

What Can I Do About The Vape Tax?

Unfortunately, not a lot. Though the best thing right now is to sign the online petition against the ban on e-liquids to ensure they don’t go a step too far. Keep your ear to the ground so you’re prepared for whatever comes.