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image of vaping | accountingweb | A Breath of Fresh Air – Vaping Excise Duty Incoming
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Vaping excise duty to bring a breath of fresh air

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With vaping duty still on track for October 2026, along with the corresponding uplift in tobacco duties, the intention to protect children from the ever-growing vape market remains unchanged.

14th Jun 2024
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Following the Spring Budget this year, the (current) government had proposed a vaping duty or tax, similar to the taxes seen with cigarettes and tobacco. The duty rates were not going to be as high for vape liquid as it is for tobacco-based products and was going to come into effect from 1 October 2026.

This vaping duty is not connected with the other proposed bill that was to ban the sale outright to anyone born after 1 January 2009. That bill was not pushed through in the “wash-up” procedures before the dissolution of Parliament at the end of May 2024.

Whatever the outcome of the election, it is unlikely that any new government would seek to withdraw the imposition of duty on vaping products. More so the focus on taxation and election promises not to raise any existing taxes suggests that new taxes (or taxes already in place but not taking effect until October 2026) are fair game.

De-mistifying excise duty 

Excise duties are normally based on quantity rather than value (alcohol strength and size, tobacco per pack or pouch) and bringing vape products into the same realm as tobacco should be fairly straightforward to implement as vape liquid is sold in millilitre bottles and current disposable vapes also indicate the quantity of liquid.

Applying excise duty also means the importation of the goods brings the goods into the excise controls regime, and would bring rise to an excise duty at the border (plus VAT too of course).

There are no plans to tax or add duty to the vape devices on the basis that disposable vapes will be banned (assuming that the legislation for this ban is carried through into the next Parliament) – that would then just leave refillable vape devices and and there is no plan currently to tax those devices other than VAT as usual.

The proposed duty therefore targets the liquid used within the vaping devices. The duty will be charged at point of manufacture or at point of import. Again, this mirrors the existing procedures for alcohol, whereby the manufacturer pays the alcohol duty, which is then passed onto the wholesaler or retailer in terms of the price paid for the finished product. Goods imported into the UK are captured at the border, again, much like alcohol or tobacco products are currently.

Running on fumes 

The proposed approach is to have a banding of rates based on the quantity (in millilitres) and the strength of nicotine in the product. The reason for the banding is to acknowledge that vaping is an alternative to smoking tobacco and that nicotine can cause damage to your body as well as addiction, so a series of excise bandings that encourage nicotine free liquids over higher-strength liquids means we end up with a banding rather than a single rate of duty.

That reflects the recent changes regarding alcohol duties, whereby a lower rate of duty applies to lower-strength products, with the aim that manufacturers will adjust their recipe and product ranges to make use of the lower duty rates.

It does lead to a potentially more complicated approach for the manufacturer who has to calculate what rates of excise duty may apply, but offers the consumer some options to reduce their use of alcohol or vaping.

Proposed bandings

The proposed bandings are as follows.

  1. £1.00 per 10ml for nicotine-free liquids. This equates to 2.4% of the current total duty on the equivalent of a cigarette.
  2. £2.00 per 10ml on liquids that contain approximately the same or less nicotine (per ml) than in an equivalent cigarette (Nicotine between 0.1–10.9 mg). This equates to 4.7% of the current total duty on the equivalent of a cigarette.
  3. £3.00 per 10ml on liquids that contain more nicotine per ml than in an average cigarette (11mg or more). This equates to 7.1% of the current total duty on the equivalent of a cigarette. 

In addition, to further discourage the use of tobacco-based products and to ensure that people who vape don’t switch to tobacco due to the increased cost of vaping, there will be a one-off increase in tobacco duty.

Tobacco duty will therefore rise by £2 per 100 cigarettes or per 50g of tobacco, which is the equivalent of a 10ml bottle of vaping liquid. This rise will come into effect in October 2026, at the same time as the duty on vaping products is introduced.

Still on track

Notwithstanding anything unpredictable, it would appear the vaping duty is still on track for October 2026 and the corresponding uplift in tobacco duties. Of course, any new government could withdraw or amend, but the intention behind the vape duty – to reduce reliance on tobacco but to protect children from the ever-growing and cheap-to-buy vape market – remains unchanged.

The detailed consultation and explanatory conclusions are available online.

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Replies (11)

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By FactChecker
14th Jun 2024 18:23

"De-mistifying excise duty" ... you caught the Aweb Editors' addiction to puns then, Jason?

Thanks (3)
Replying to FactChecker:
VAT
By Jason Croke
17th Jun 2024 19:24

I try to avoid the puns on the more serious topics but couldn't resist a few in this article seeing as the subject matter is such a drag.

Thanks (1)
Replying to FactChecker:
VAT
By Jason Croke
17th Jun 2024 19:24

I try to avoid the puns on the more serious topics but couldn't resist a few in this article seeing as the subject matter is such a drag.

Thanks (1)
Replying to Jason Croke:
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By FactChecker
17th Jun 2024 21:55

Take it easy on the toking there ... the next thing is you'll be repeating yourself - oh!

Thanks (4)
By SteveHa
15th Jun 2024 19:28

As someone who vapes, and makes his own liquid, I can circumvent this for a few years by simply stocking up on nicotine ahead of time. 1L will last me at least two years, so if I buy (and freeze) 4L, I'll be good for 2 Parliamentary terms.

Thanks (4)
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By gillybean04
16th Jun 2024 11:41

I don't think this is going to meet it's intended objective. Then again the cynic in me thinks the actual objective is to introduce a new duty under the guise of protecting the youth.

Putting the price of cigarettes up didn't stop my generation from smoking and nor did pushing the price of alcohol up stop any of them drinking.

They would just club together or ask for more pocket money if they couldn't afford the new prices.

Maybe we need a new currency for youths that can't be spent on age restricted items.

Thanks (1)
panda ketteringUK
By ketteringUK
16th Jun 2024 22:54

Great to see this covered. I guess a stockpiling will be a way to go from my personal pov.

I feel the whole thing will be like cannabis type of drugs. Decent folks like us will be paying more to vape and dubious folks in addition to buying their weed will also buy illicit ciggies at the same time. No prosecution there (as they don't charge the end users for smoking weed) but decent professionals or law abiding mugs will be taxed once again a premium to fund the government so they can distribute our money.

Strangely enough no extra duty to Scottish distilleries or Diageo (even that the excess alcohol consumption is also very harmful).

What next - taxing meat and dairy and force us to eat grasshoppers?

Thanks (1)
Replying to ketteringUK:
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By Amy Chin
18th Jun 2024 14:07

What next - taxing meat and dairy and force us to eat grasshoppers?

[/quote]

Now there's a thought...

https://www.accountingweb.co.uk/community/blogs/amy-chin/veganuary-doesn...

:-)

Thanks (0)
Replying to Amy Chin:
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By FactChecker
18th Jun 2024 16:28

"Now there's a thought..."
... have you discovered any grasshoppers made entirely of vegetable matter then?

Thanks (2)
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By AdamJones82
17th Jun 2024 16:59

Tax the foul sickly-sweet smelling vapes as high as you can to make them unaffordable.
Laughable seeing people suck on them like a teat

Thanks (2)
stonks
By WinterDragon
18th Jun 2024 14:35

As I self described sensible vaper (or vapist?) I use a refillable device with a replaceable battery to minimise environmental impact. I cannot stand disposable products with the amount I see littered around or the ease of access from bossman at any corner shop for the nations youth.

I used to work in a vape shop when I left school and the general advice for those quitting smoking was to start on a higher strength product (like 12-18mg) and then gradually reduce it to kick the habit over time. This was what I was doing until new products hit the market that used a salt-based nicotine that was much smoother on the throat. I have since used 20mg strength products because these give you the feeling of having a cigarette with a buzz after a few puffs. I find it easier to use the high strength and reduce usage rather the reduce strength.

I worry that by adding increased cost to the higher strengths will discourage heavier smokers from making the switch - though even with the duty it would probably still be cheaper than buying 20 cigarettes every day.

Woe is me, I guess I'll join the 4litres of liquid in my freezer gang in 2026.

Thanks (1)