Ministers are considering a new vaping tax in next week39s

Ministers are considering a new vaping tax in next week's budget

  • By Henry Zeffman and Paul Seddon
  • BBC News

February 27, 2024, 08:27 GMT

Updated 2 hours ago

The government is considering announcing a new tax on e-cigarettes in next week's budget.

E-cigarettes are currently subject to VAT – but unlike tobacco, they are not subject to a separate tax.

Tobacco tax could also be increased in the budget to ensure vaping remains cheaper.

Ministers fear that the relatively low cost of e-cigarettes will make the products more accessible to young people and non-smokers.

At the King's Speech in November, the government said for the first time that it was considering an e-cigarette tax, citing a “significant difference” to tobacco tax.

According to the Times, which first reported the story, the new tax will be imposed on the liquid in e-cigarettes, with higher rates for products with more nicotine.

A Treasury analysis suggests the new e-cigarette tax, together with the increase in tobacco duty, could ultimately raise around £500 million a year.

The separate tax on tobacco products was raised by 2% above inflation last year as part of the autumn declaration.

Several European countries have taxes on e-cigarettes. The European Commission plans to introduce a minimum tax rate across the EU.

This comes after plans were announced last month to introduce a nationwide ban on disposable vaporizers, along with restrictions on flavors and their packaging.

The British government ministers responsible for passing the ban in England hope to pass the relevant legislation before the next election.

Budget warning

The ban would then come into force in early 2025, with retailers having six months to make the changes once the timing is determined.

The government also plans to increase fines for retailers who sell e-cigarettes to under-18s, which is illegal.

In next week's budget, the government will unveil its tax and spending plans for next year amid sluggish economic growth.

Chancellor Jeremy Hunt has indicated he would like to cut taxes in what could potentially be the last Budget before a general election.

But the Institute of Fiscal Studies, a think tank, said Britain was in a “poor position” to do so.

It pointed out that in the autumn statement the Chancellor was “just” on track to meet the government's rule that official forecasts should show debt as a percentage of national income falling in five years.

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