UK Government Announces Vape Tax

Yesterday, the top United Kingdom treasury official announced that vaping products will be taxed at a rate of £2.20 per 10 milliliters of e-liquid, beginning Oct. 1, 2026. UK Chancellor of the Exchequer Rachel Reeves said that the government would also increase the levy on cigarettes to maintain the economic advantage of switching to vaping.

It was the second time in a week that the Labour Party-led government announced policies that will reduce access to vaping products. Last week the government announced it intends to ban the sale of disposable vapes in June 2025. 

The government also plans to pass the Tobacco and Vapes Bill, which will grant it additional regulatory powers over vaping, andincludes a so-called “smokefree generation” law.

The Vaping Products Duty will apply to nicotine-free e-liquid

The previous Conservative (Tory) Party government announced in March that it would impose a vape tax beginning in 2026, and launched a consultation to gather opinions. It had proposed taxing vaping products on a sliding scale based on nicotine content, but the Labour government (which beat the Tories in a July general election) has abandoned that plan.

The new tax scheme will levy a flat £2.20 per 10 mL (about $2.83 U.S.), no matter the nicotine content. For nicotine-containing e-liquid, 10 mL bottles are the maximum legal size in the UK, and typically cost about £5. 

It’s not yet clear how the tax will be applied to prefilled pods and cartridges, or other vaping products that contain e-liquid not in multiples of 10 mL. (Disposable vapes will be banned a year before the tax takes effect.)

To save money, many vapers buy nicotine-free “shortfills,” which they mix with nicotine that is sold separately. Shortfills can be any size, but are commonly 100 mL bottles filled with 80 mL of nicotine-free e-liquid. Beginning in 2026, they too will be taxed at a rate of  £2.20 per 10 mL—as will the nicotine shots consumers add to them. 

Bottled nicotine solution used by DIY mixers will be taxed too, and the government is considering new controls on the nicotine supply.

The “Vaping Products Duty (VPD)” is applied at the point of manufacture (or import), so it won’t necessarily be passed on fully to consumers. Manufacturers may absorb part of the tax cost in an effort to remain competitive.

Most retail products in the UK, including all vaping products, are also subject to a 20 percent value added tax (VAT—a sales tax), which is applied at the point of purchase.

If the manufacturer’s Vaping Products Duty cost were passed directly to consumers, it would add £2.20 to the retail price of a 10 mL bottle of e-liquid, which usually costs about £5. Add in the VAT, and the price of that bottle would climb to £9.20.

Quit comparing cigarettes and vapes based on nicotine content

The government justifies the new tax with a bizarre comparison of the nicotine contained in cigarettes and vape juice. The £2.20 per 10 mL Vaping Products Duty, they say, is “roughly 5.02% of the current total duty on the equivalent quantity of a typical cigarette (assumption of 10ml vaping liquid equating to 100 cigarettes).”

That’s quite an assumption. It’s very, very wrong.

There is an average of 10.2 milligrams of nicotine in a cigarette, which means a pack of 20 would contain 204 mg, and 100 cigarettes (five packs) would contain 1,020 mg.

But 10 mL of e-liquid at the legal maximum nicotine strength of 20 mg/mL would contain just 200 mg of nicotine—less than one-fifth the nicotine contained in five packs of cigarettes.

However, none of this matters, because nicotine isn’t the reason cigarettes kill you. Smoke kills people, not nicotine.

Taxing nicotine products based on nicotine content is foolish, since the goal should be to shift users of combustible tobacco to smoke-free nicotine products like vapes—not to eliminate nicotine use altogether. The vape tax does the opposite; it reduces the financial advantage of switching to a low-risk product.

Another consultation: tax stamps and control of the nicotine supply

The government response to the consultation was published yesterday to coincide with the tax announcement. It explains the government’s thinking on the tax, but also launches a second consultation on design of the proposed tax stamp scheme, and whether the government tax agency (HMRC) “should implement controls on the supply of nicotine.”

As the New Nicotine Alliance explains in a commentary on the tax proposal, the tax stamp scheme will itself add to vaping manufacturers’ costs, which will inevitably be passed along to consumers.