HMRC is set to start charging more than five million people around £275 a year as a new tax comes into force on vaping products. It is estimated that around 5.1 million vapers will be affected when the Government implements the new excise duty on all vaping products from October.
How the new duty works
The Vaping Products Duty will tax e-liquid at a flat rate of 22p per millilitre - or £2.20 per 10ml - plus 20% VAT. As a result, a typical 10ml bottle of e-liquid, which currently costs roughly £2.50 to £3, is expected to rise to more than £5 after the tax is introduced. With the price of a 10ml bottle rising by at least £2.64, Bristol Live reports.
HMRC has estimated 5.1 million people will be affected by the duty, while the Office for Budget Responsibility forecasts it raising £600 million a year by 2030/31.
Cost to the average vaper
Assuming a vaper uses two 10ml bottles of e-liquid each week, the tax would increase their spending by around £275 a year, equivalent to £5.28 a week. This means if these rates remain in place they can expect to spend £8,220 more over a 30-year period than they would have prior to the rise in taxes.
At the same time, the government will hike Tobacco Duty, but there will be an additional increase to ensure smoking cigarettes remains the less affordable option. Tobacco Duty will be hiked by the RPI plus two per cent, as well as an additional £2.20 per 100 cigarettes, or per 50g, equivalent to the new VPD.
Government rationale and wider changes
The government said it was bringing in the additional increase on Tobacco Duty to ensure that the cost of smoking remains higher than the cost of vaping, which is seen as less harmful. Explaining the duty changes, the government said it is “committed to reducing the affordability and appeal of vaping products, particularly among young people and non-smokers, while maintaining the financial incentive for smokers to switch to less harmful alternatives.”
It comes after the government unveiled a range of changes to a series of vaping laws last month which are set to come into effect at the end of October - restricting who can purchase the devices and cracking down on how they are being marketed. Andy Burnham is aiming to curb the appeal of the habit for young people in the UK by making it an offence to sell any vape products to a person under the age of 18. This will include nicotine pouches and zero-nicotine vapes. This rule will come into place on 29 October.
