Chancellor to increase tax on vapes and tobacco products
Smokers are set to face higher prices after the Chancellor Jeremy Hunt confirmed tax increases for tobacco products and vapes in today's Spring Budget.
A new vaping product duty and one-off tobacco duty will come into force from October 2026.
The duty freeze on alcohol, announced in last year's Autumn Budget, has been extended until February 2025. There are no changes to the 'sugar tax' (the Soft Drinks Industry Levy).
These so-called 'sin taxes' are applied to products seen as harmful to consumers or costly to society, and are charged in addition to the standard VAT rate of 20%.
- Find out more: what the Spring Budget means for your money
Vaping duty aimed at deterring young smokers
The new tax on vapes aims to tackle youth vaping and discourage non-smokers from taking up the habit.
Products with higher levels of nicotine will be subject to higher tax.
Rates will be charged at:
- £1 per 10ml for nicotine-free liquids
- £2 per 10ml on liquids that contain 0.1-10.9mg nicotine per ml
- £3 per 10ml on liquids that contain 11mg or more per ml.
The rates will come into force from October 2026.
This follows Rishi Sunak's major clampdown on smoking last year, when he announced a ban on the sale of tobacco products to anyone born after 1 January 2009.
- Find out more: the vape debate explained
Tobacco duties
But Hunt also acknowledged the 'positive role' vaping plays in helping people quit smoking.
He announced a one-off tobacco duty to ensure vapes remain cheaper than cigarettes.
From October 2026, there will be a duty increase of £2 per 100 cigarettes or 50g of tobacco.
The government says the tax will raise a further £170m in 2028-29.
Previous tax rises in November's Autumn Statement 2023 added £2.21 to a packet (30g) of hand rolling tobacco and 66p to a packet of 20 cigarettes.
Alcohol duties remain frozen until February 2025
Hunt confirmed that the freeze on alcohol duties, which was due to end in August 2024, will be extended to February 2025.
The government introduced a radical simplification of alcohol tax in the Autumn 2021 Budget.
These changes came into force in August 2023, slashing the number of duty rates from 15 to six, and making stronger drinks (such as high-strength ciders, red wine and fortified wine) more expensive.
The current rates charged per litre of alcohol by volume (ABV) are:
- All alcoholic products less than 3.5% ABV = £9.27/per litre
- Still cider at least 3.5% but less than 8.5% ABV, and sparkling cider between 3.5% and 5.5% ABV = £9.67/litre
- Beer at least 3.5% but less than 8.5% ABV = £21.01/litre
- Spirits, wine and other fermented products at least 3.5% but less than 8.5% ABV, and sparkling cider at least 5.5% but less than 8.5% ABV = £24.77/litre
- All alcoholic products at least 8.5% but not exceeding 22% ABV = £28.50/litre
- All alcoholic products exceeding 22% ABV = £31.64/litre
Rates are charged per litre for every 1% of alcohol. For example, the duty on a pint of 5%-strength draught lager is 54p (21.01p x 5 = 105.05p per litre, equivalent to 54p a pint or 0.568 litres).
| Duties before August 2023 | Duties since 1 August 2023 | |
|---|---|---|
| Draught pint of beer 5% ABV | £0.54 | £0.51 |
| 75cl bottle of wine 12% ABV | £2.23 | £2.33 |
| 75cl bottle of prosecco 8% ABV | £2.16 | £1.35 |
| 1-litre bottle of vodka 40% ABV | £11.50 | £11.50 |
Duties frozen until February 2025. More details at Gov.uk.
- Find out more: how to spend less at the supermarket
Sugar tax
No changes were announced for the Soft Drinks industry Levy (or 'sugar tax'), which hasn't changed since April 2018.
The tax rates for soft drinks are:
- 24p per litre if it contains 8g or more of sugar per 100ml
- 18p per litre if it contains between 5g and 8g of sugar per 100ml.
Manufacturers are encouraged to reduce the sugar content of their drinks to below the taxable thresholds.
