Vaping Products Duty Is Here: What Retailers and Suppliers Need to Know

DUTIES & EXCISE

3K Financial & Accounting Services Ltd  |  Keeping Klient Knowledgeable

A new tax on vaping came into force on 1 October 2026. Vaping products duty (VPD), announced in the 2024 Budget, applies to vapes, vaping liquids and disposable vapes. At the same time, the government has introduced an immediate extra increase in tobacco duty. For retailers, wholesalers, importers and manufacturers, this is a significant change to pricing, cash flow and compliance.

How the new duty works

VPD is charged at a flat rate of 22p per millilitre of vaping liquid, regardless of nicotine strength. In practice that means:

•     A 2ml pod attracts 44p of duty.

•     A 10ml refill bottle attracts £2.20 of duty.

As an example, a typical disposable vape retailing for between £5 and £6 is expected to rise to between £7.20 and £8.20.

Duty stamps

Vaping products manufactured in or imported into the UK now need a duty stamp. The stamp acts as evidence that the correct duty has been accounted for.

Key transition dates

•     1 October 2026 to 31 March 2027: vape shops can buy and sell existing eligible unstamped stock during a six-month transition period, according to HMRC.

•     30 November 2026: the last date representatives and warehouses can buy transitional duty stamps.

•     31 December 2026: the last date transitional duty stamps can be affixed.

Tobacco duty also rises

HMRC has described the tobacco change as a one-off, pro-rata increase of £2.20 per 100 cigarettes or per 50 grams of tobacco. That is roughly 44p on a pack of 20 cigarettes. It comes on top of the standard tobacco duty escalator.

What the Treasury and industry say

The Treasury forecasts that the new levy will raise £120m in the first six months and £240m a year after that, rising to around £445m a year by the end of the decade. The UK Vaping Industry Association has criticised the measure, arguing that it increases the cost of a product that has helped many adults cut down or stop smoking. Its own survey suggests around half of vapers could return to smoking or turn to the black market. As always with a tax change of this size, the real-world effect on sales remains to be seen.

What businesses should do now

1.      Review your pricing and margins. Work out the duty on each product line and decide how much will be passed on to customers.

2.      Check your stock. Identify unstamped stock and plan how it will be sold, or stamped, within the transition dates.

3.      Plan your cash flow. Duty is a significant new cost, so make sure you can fund purchases of duty-paid stock.

4.      Confirm your obligations. Check with HMRC, or with us, what registrations, stamps and records apply to your role in the supply chain.

5.      Update your bookkeeping. Make sure duty is recorded correctly in your accounts, and think about how it affects your VAT-inclusive prices.

If your business sells or supplies vaping or tobacco products, speak to us early. Getting your processes right before the transition dates pass is far easier than putting things right afterwards.

KEY TAKEAWAYS •     Vaping products duty began on 1 October 2026 at 22p per ml of liquid. •     Products need a duty stamp, with transition dates running to 31 March 2027. •     Tobacco duty also rose by £2.20 per 100 cigarettes or 50g of tobacco.