Spring Budget 2024 Anticipates Announcement of Vaping Tax by Jeremy Hunt

February 27, 2024

Jeremy Hunt is anticipated to unveil a new tax on vaping products in the upcoming Spring Budget, as reported by The Times. The Chancellor is reportedly considering a levy on the liquid in vapes based on their nicotine content. This move follows last month’s confirmation by the government to prohibit disposable vapes, aiming to prevent children aged 15 and under from legally purchasing tobacco.

In addition to the vaping tax, Hunt is contemplating a one percentage point reduction in employee national insurance, with an annual cost estimated at around £4.5 billion. While vapes are subject to VAT, they are not levied separately like tobacco.

Concerns have been voiced by the government regarding the attractiveness of vapes to young people and non-smokers due to their cost and accessibility. Ministers may opt for an increase in tobacco duty along with the introduction of a vaping levy on imports and manufacturers to maintain e-cigarettes as a more economical alternative to smoking.

The anticipated revenue from the two measures is expected to surpass £500 million annually by 2028-29, according to The Times. 

The proposed vaping tax aligns with existing schemes in Germany and Italy, where levies range from €1.30 to €1.60 on each 10ml of vape liquid. The European Union is also planning a bloc-wide vaping levy, potentially up to 40%.

Christopher Snowdon from the Institute of Economic Affairs (IEA) cautioned against taxing e-cigarettes, citing evidence from other countries that suggests it leads to increased cigarette sales and more smoking. Snowdon argued that discouraging the use of one product essentially promotes the use of the other, characterising anti-vaping policies as pro-smoking.