Decline in Tobacco and Alcohol Taxes in UK

Market by 2FIRSTS.ai
Jan.18.2024
Decline in Tobacco and Alcohol Taxes in UK
According to a recent analysis by financial experts RIFT, tobacco and alcohol tax in the UK has dropped at the fastest annual rate in two decades.

According to a January 17th report by British media outlet EINPresswire, the latest analysis from financial experts at RIFT suggests that the total amount of tobacco and alcohol tax received by the HM Revenue and Customs (HMRC) in the UK last year declined at the fastest annual rate in twenty years. Despite a continuous upward trend in tobacco and alcohol revenue during the same period, the data suggests that we may be seeing a trend of decreasing alcohol consumption and smoking habits.

 

RIFT has analyzed the latest data on tobacco and alcohol tax revenues from HMRC (up to December 2023), illustrating the changes in these tax revenues over the past 20 years and comparing them to NHS healthcare expenditures caused by smoking and alcohol consumption.

 

Analysis shows that the UK customs collected over £10 billion in tobacco taxes in the 2022/23 fiscal year. Although this is the second-highest total in the past twenty years, it signifies a 2.7% annual decrease, marking the third significant annual decline in two decades. Meanwhile, alcohol taxes paid in the 2022/23 fiscal year amounted to £12.4 billion, the highest total in the past 20 years. However, this represents a 5.1% annual decrease, the most severe single-year decline in two decades. Consequently, the total amount of taxes paid on tobacco and alcohol products last year reached £22.4 billion, despite the substantial sum, it indicates a 4% annual decrease, representing the largest annual reduction in the past 20 years.

 

This also marks the fourth consecutive year of decline in overall tobacco and alcohol tax revenues over the past two decades. Interestingly, in 2003/04, tobacco taxes accounted for 52% of HMRC's total income, but this proportion has now shifted, with alcohol taxes making up 55%. While smoking and drinking are detrimental to health, additional research by RIFT reveals that smoking-related medical expenses cost the NHS approximately £3.4 billion annually, whereas alcohol-related healthcare issues amount to £4.1 billion each year. Together, these expenses result in an expenditure of nearly £7.5 billion per year due to smoking and alcohol-related problems.

 

Although the figure itself is substantial, it only represents one-third of HMRC's total revenue from tobacco and alcohol taxes for the 2022/23 fiscal year.

 

RIFT General Manager Bradley Post commented, "Smoking and drinking are primary vices that many of us hope to quit, and we expect to begin the new year with a positive attitude. Currently, tobacco and alcohol tax revenues remain at their second-highest level in the past twenty years, generating approximately three times the estimated cost of medical services. However, both sources of tax revenue have seen the fastest decline in the past two decades.

 

One important issue to consider is the rise of e-cigarettes. Currently, e-cigarettes are not subject to the same taxation as tobacco products, although this situation may soon change. As a relatively new phenomenon, we do not yet know how many people choose to use e-cigarettes or what impact this will have on the NHS in the coming years.

 

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

JTI Makes Third Bet on South Korea as Ploom AURA Enters a Market Dominated by lil and IQOS
JTI Makes Third Bet on South Korea as Ploom AURA Enters a Market Dominated by lil and IQOS
Japan Tobacco International is stepping up its heated tobacco push in South Korea with Ploom AURA. Since its official launch in April 2026, the device's limited First Edition and Glacier White version have sold out, while distribution has expanded across Seoul, Incheon, Gyeonggi Province and airport duty-free channels. The rollout marks JTI's third major attempt to build a stronger heated tobacco position in South Korea, following Ploom TECH in 2019 and Ploom X Advanced in 2024. At the group level, JT plans to invest about ¥800 billion, approximately $5 billion, in reduced-risk products from 2026 through 2028, with heated products and Ploom identified as its primary investment priority.
Aug.14
BAT New Categories Revenue Rises 18% in H1 2026 as Broad Portfolio Offers More Ways to Win—and Lose
BAT New Categories Revenue Rises 18% in H1 2026 as Broad Portfolio Offers More Ways to Win—and Lose
British American Tobacco’s New Category revenue rose 18% at constant rates in the first half of 2026. Nicotine-pouch brand Velo expanded rapidly, while Vuse recovered as U.S. enforcement against illicit e-vapor products strengthened. Heated-tobacco platform glo remained under pressure, and cigarettes continued to provide most of the group’s profit and cash. Compared with PMI and JT, BAT has more routes to growth—but also greater regulatory, investment and execution risks across its broader portfolio.
BAT
Jul.30
PMI Oral Products Chief Says Lack of Rules May Push Nicotine Pouch Market Into Illicit Trade
PMI Oral Products Chief Says Lack of Rules May Push Nicotine Pouch Market Into Illicit Trade
Nick Ricketts, President of Oral Products at Philip Morris International (PMI), told Logos Press that nicotine pouches should be brought under clear regulatory frameworks covering nicotine limits, flavor rules, age verification, sales controls and marketing standards, arguing that the absence of clear rules or blanket bans may push consumer demand into illegal or semi-legal channels.
Jul.06
BAT Calls for Retailer Input in Future Nicotine Regulations
BAT Calls for Retailer Input in Future Nicotine Regulations
British American Tobacco (BAT) has called for stronger retailer involvement in shaping future nicotine product regulations in the UK, arguing that frontline market feedback should be considered during policy development. BAT said retailers provide direct insight into consumer behavior, market changes and regulatory implementation challenges. The comments come as the UK nicotine market undergoes regulatory changes, including the disposable vape ban, Vaping Products Duty and efforts to address illicit vape sales.
Jul.29
Russian Strikes Destroy JTI and Imperial Brands Ukraine Warehouses, With Losses Reaching Tens of Millions of Hryvnias
Russian Strikes Destroy JTI and Imperial Brands Ukraine Warehouses, With Losses Reaching Tens of Millions of Hryvnias
According to Ukrainska Pravda, Russian strikes on the Kyiv region during the night of Aug. 4-5, 2026, damaged warehouses storing products of Japan Tobacco International (JTI) and Imperial Brands Ukraine. JTI said a finished goods warehouse in Kyiv Oblast was destroyed, with no employees injured, and that it did not expect disruptions to retail supplies. Imperial Brands Ukraine said products stored at warehouses of distributors and retail partners were affected and estimated losses from the strikes at “tens of millions of Ukrainian hryvnias” (roughly hundreds of thousands of U.S. dollars).
JTI
Aug.07
BAT's VELO Partners With McLaren F1 Team for Global Fan Campaign to Expand Nicotine Pouch Brand Reach
BAT's VELO Partners With McLaren F1 Team for Global Fan Campaign to Expand Nicotine Pouch Brand Reach
BAT-owned nicotine pouch brand VELO and the McLaren Mastercard Formula 1 Team have launched a global fan engagement campaign offering motorsport enthusiasts opportunities to win exclusive team-related experiences. The initiative aims to connect racing culture, fan interaction and VELO’s brand experience across global markets. The partnership reflects BAT’s broader strategy of expanding modern nicotine product brands beyond traditional tobacco categories through lifestyle and cultural marketing.
Jul.23