UK Plans to Implement Additional Tax on E-Cigarettes in 2026
According to a report by Reuters on March 6th, British Finance Minister Jeremy Hunt has announced plans to impose additional taxes on e-cigarette products starting in October 2026. The aim is to raise the price of e-cigarettes and deter non-smokers from taking up smoking. Hunt stated that the government will also raise tobacco taxes on disposable cigarettes to maintain the price advantage of e-cigarettes over traditional cigarettes, in order to incentivize smokers to choose e-cigarettes.
Hunter stated in his budget speech on Wednesday, March 6th that this tax will be implemented in October 2026. He also mentioned that the government will be consulting on the design of the tax.
In the increasingly stringent tobacco regulations and declining smoking rates, e-cigarettes may represent an increasingly important source of revenue for British American Tobacco. According to analyst Owen Bennett of Jefferies, this taxation may make it difficult for small businesses to compete, benefiting large tobacco companies like British American Tobacco.
BAT can afford such taxes and does not need to adjust prices.
This could potentially lead to small companies being unable to survive.
The spokesperson for British American Tobacco UK has stated, "We encourage the government to implement an e-cigarette tax before October 2026 to tackle the rampant illegal market." The company supports a "low" consumption tax on nicotine e-liquids in e-cigarettes, but believes that taxing based on nicotine content would be difficult to enforce.
Due to the rapid increase in non-smokers and young people using e-cigarettes, the UK government has been forced to consider stricter control measures. Most e-cigarettes will be subject to the standard 20% value-added tax, but no additional charges will be imposed.
Maggie Rae, Chair of the Epidemiology and Public Health Committee of the Royal Medical Association, stated that any tax increases must be carefully considered to ensure they do not undermine efforts to encourage smokers to quit.
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