A tax most shoppers had never heard of arrived on 1 October, and yet almost nobody will pay it at the till. Vaping Products Duty took effect across the UK, charging 22p for every millilitre of e-liquid, or a flat £2.20 on a standard 10ml bottle. The BBC has reported, though, that prices are not expected to rise straight away.
The gap between a tax starting and shelves reflecting it is stock. Retailers bought heavily through September, and distributors are working through duty free inventory that was paid for under the old rules. The same pattern played out when sugar taxes and plastic levies landed. By the time the pipeline runs dry, most vapers will meet the new price without anyone needing to announce it.
The government’s reasoning is public health rather than revenue, or at least it leads with public health. The duty applies to every product regardless of nicotine strength, which closes an obvious loophole: a manufacturer cannot dodge the tax by selling nicotine free liquid that users spike themselves. It sits alongside the disposable vape ban and the duty stamp scheme that HMRC is running to make the new regime enforceable.
For the industry the timing is unwelcome. Vape shops spent the pandemic years growing into one of the few bright spots on the high street, and many now operate in towns where independents are thinning out. A £2.20 uplift on a product that often retails for under £6 is not small. The trade bodies argue that pushing vapers back toward cigarettes would defeat the purpose of a tax sold as a health measure.
That argument has a counterweight. The Office for National Statistics and NHS data have tracked a decline in youth vaping over the past year, and ministers are wary of being seen to tax a smoking cessation tool out of reach of the adult quitters who rely on it. The design of the duty, flat rather than strength based, suggests they wanted the simplest line to draw.
What happens next is a pricing experiment with a wide audience. Retailers who absorb the duty protect customers but compress margins they may not have. Those who pass it through risk losing the price advantage over cigarettes that made vaping popular in the first place. The Treasury will watch the receipts. The health lobby will watch the smoking rates.
For now the only certainty is that the cheapest week in the history of legal vaping has just closed.