United Kingdom: Vaping products now taxed and traceable

Since October 1, 2026, the UK has levied an excise duty of £2.20 per 10ml on all vaping liquids, whether or not they contain nicotine. This new tax is accompanied by a system of secure tax stamps, which will be digitally enabled from 2027, designed to ensure product traceability throughout the supply chain and facilitate the fight against illegal products. The British government expects this to generate over £550 million in annual revenue by 2030-2031 and allocates £30 million per year to enforcement services. As the tax increase approaches, the UK's leading vaping trade association has warned of a surge in the black market. This argument echoes the one the tobacco industry has consistently and for a long time used to oppose public health measures. The evolution of the illicit tobacco market in the UK suggests this argument should be put into perspective, especially since traceability measures are intended to combat illegal parallel markets.

In practical terms, only manufacturers, importers, and warehouse operators authorized by HM Revenue & Customs (HMRC) can now produce or place vaping products on the market. They pay the duty and must affix a tamper-evident stamp, either yellow or red, to each product. The system is phased in: transitional stamps, without a digital element, can be affixed until December 31, 2026; only digital stamps are permitted from January 1, 2027; unstamped stock can be sold until March 31, 2027; and from April 1, 2027, all products sold in the UK must bear a valid stamp. Digital stamps can be scanned by retailers and consumers to verify the authenticity of the products.[1]-[2].

Taxation coupled with supply chain control

The new law applies to all vaping liquids, with or without nicotine. On the same day, the British government raised tobacco taxes by £2.20 per 100 cigarettes or 50 grams of other tobacco products, in addition to the scheduled annual increase. Manufacturing vaping products without a license is punishable by civil penalties, seizure of goods and equipment, and criminal prosecution, with fines of up to £10,000.[3].

The government presents the scheme as a tool to combat the illicit market. According to James Murray, Financial Secretary at the Treasury, these measures should "help remove illicit vaping products from the country's high streets." The British market continues to grapple with the sale of non-compliant products: nearly 5 million illegal vaping products have been seized in three years, including 1.3 million in 2025, according to data obtained from local authorities by an industry distributor.[4].

HMRC has contracted Cartor Security Printers, a security printer, to produce the stamps under a £32 million (excluding VAT) five-year public procurement agreement. The company also manages the stamp ordering system and collects data on manufacturers, products, and the supply chain.[5].

The increase in illicit trade, a recurring argument against public health measures

Just days before the tax comes into effect, the UK Vaping Industry Association (UKVIA), the sector's main trade organization, released the results of a survey of approximately 3,500 vapers. Half of them said they were considering going back to smoking tobacco or buying on the black market, and more than nine out of ten believe the tax will boost the illicit market.[6]. These are stated intentions, collected by an organization that defends the economic interests of the sector, and not a measure of actual behavior. While UKVIA states that it no longer counts tobacco manufacturers among its members since September 2023, this argument echoes the one the tobacco industry has long used against any tax increase and, more generally, against any measure likely to reduce tobacco consumption.

This argument has indeed been systematically used by tobacco manufacturers against tax increases, plain packaging, and the generational ban on tobacco sales in the United Kingdom, relying on studies they fund that greatly overestimate the size of the illicit market.[7]. The latest KPMG report on parallel markets in Europe, commissioned by Philip Morris, illustrates this point: it attributes 53.6% of cigarette consumption in France to the parallel market, while French authorities estimate figures to be between 11% and 20%. Its methodology, based on collecting empty packs in unrepresentative areas, also conflates legal cross-border purchases, smuggling, and counterfeiting.

A report published in November 2025 by the Global Center for Good Governance in Tobacco Control (GGTC) shows that this discourse is also used to gain privileged access to public decision-makers. At least 19 governments have entered into anti-illicit trade partnerships with the tobacco industry, and several tax increases have subsequently been abandoned, notably in Poland, Georgia, and Argentina, due to the spread of this unfounded argument.[8]. The same report recalls the responsibility of the manufacturers themselves in smuggling, established by court decisions: in 2004, Philip Morris International concluded an agreement with the European Union providing for the payment of $1.25 billion over twelve years to end the proceedings brought by the European Commission and ten Member States against the tobacco company for smuggling, and the Canadian subsidiary of JTI pleaded guilty in a case related to smuggling.

Taxing and tracing: two complementary levers recognized by the CFLAT

The UK's experience with tobacco contradicts the objection that high taxes automatically fuel the illicit market. While the UK has one of the highest tobacco taxes in Europe, the illicit market share of cigarettes fell from 20% in 2000-2001 to 12% in 2024-2025, and that of rolling tobacco from 61% to 19%, according to HMRC data compiled by Action on Smoking and Health (ASH). Tax increases do not have a significant impact on the illicit market when accompanied by a comprehensive control strategy.

This link between taxation and enforcement is central to the provisions adopted internationally. Article 6 of the WHO Framework Convention on Tobacco Control (FCTC) recognizes fiscal measures as an effective means of reducing consumption, while the Protocol to Eliminate Illicit Trade in Tobacco Products, to which the United Kingdom is a party, mandates a tracking and tracing system whose obligations cannot be carried out by the tobacco industry or delegated to it (Article 8). By entrusting this system to a service provider chosen and controlled by the tax authorities, the United Kingdom is following this logic. The implementing provisions of Article 5.3 of the FCTC stipulate that public authorities base their decisions on independent data, and not on estimates produced or funded by manufacturers.

The issue arises in the same terms at the European level. The revision of the directive on the taxation of tobacco products, which notably includes extending the minimum tax to vaping products and nicotine pouches, was removed from the agenda of the Ecofin Council meeting of June 12, 2026, due to a lack of unanimity among Member States. The implementation of the British system, and the actual evolution of the illicit market beyond the projections put forward by the sector, could provide valuable lessons for European policymakers in this regard.

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[1] HM Revenue & Customs, «New Vaping Products Duty comes into effect», press release, October 1, 2026, accessed October 6, 2026.

[2] HM Revenue & Customs, «One month until Vaping Products Duty and the Vaping Duty Stamps Scheme start», GOV.UK, 1 September 2026, accessed 6 October 2026.

[3] Tobacco Reporter, «UK Vaping Duty Takes Effect», 1 October 2026, accessed on 6 October 2026.

[4] Better Retailing, «Almost five million illegal vapes seized in UK over last three years», February 25, 2026, accessed October 6, 2026.

[5] Find a Tender Service, HMRC Market Notice No. 011663-2026, Vaping Duty Stamps Scheme, 2026, accessed on October 6, 2026.

[6] Better Retailing, «Vape duty could drive consumers to black market, UKVIA warns», September 28, 2026, accessed October 6, 2026.

[7] Action on Smoking and Health, «Illicit tobacco: facts, trends and industry tactics», June 2026, accessed October 6, 2026.

[8] D. Sy, M. Assunta, Global Center for Good Governance in Tobacco Control, «A response to tobacco industry's illicit trade narratives to interfere with policy making: the triple fiscal loss», November 2025, accessed October 6, 2026.

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