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The UK government is introducing a new tax regime for vaping products. From initial proposals to eventual implementation, the policy has undergone several stages of adjustment and refinement, gradually forming a regulatory framework centered on a unified tax rate, an accelerated disposable vape ban, and strengthened compliance measures. The following outlines the development of this policy and its far-reaching implications for the industry.
March 2024
Initial Tax Proposal
In the Spring Budget of March 2024, then-Chancellor Jeremy Hunt first proposed a consumption tax on e-liquids, suggesting a tiered tax system based on nicotine concentration: £1 per 10ml for nicotine-free liquids, £2 for low concentrations, and £3 for high concentrations. The measure was scheduled for implementation in October 2026. The proposal aimed to preserve the price advantage of vaping over traditional tobacco products, reduce youth access, and generate revenue for public services.
October 2024
Policy Direction Finalized
In the Autumn Budget of the same year, Chancellor Rachel Reeves announced a significant shift in direction. The tiered tax structure was scrapped and replaced with a flat-rate duty: £2.20 per 10ml on all e-liquids, regardless of nicotine content, plus 20% VAT. The implementation date remained October 2026. In parallel, the government brought forward the ban on disposable vapes to June 2025 and advanced the legislative process for the Tobacco and Vapes Bill to strengthen controls on advertising, sales, and youth access.
2025
Legislative Development and Preparatory Measures
According to official statements from HM Treasury and HMRC, the government plans to submit the legislative text for the vaping duty and the Vaping Duty Stamps (VDS) scheme to Parliament in Autumn 2025, laying the legal foundation for enforcement. It will also launch a business registration mechanism, define tax liability, and outline the requirements for overseas manufacturers to appoint UK-based representatives for stamp management. All tax and stamping obligations will take effect from 1 October 2026.
Tax Structure and Scope
As outlined in government policy documents, starting 1 October 2026, the UK will impose a unified excise duty on all vaping liquids:
• Taxable items: All e-liquids, with or without nicotine
• Duty rate: £2.20 per 10ml
• Value Added Tax: Additional 20% VAT, bringing the total tax burden to £2.64 per 10ml for consumers
• Exempt items: Hardware components (e.g., atomizers, batteries) are exempt from the vaping duty and subject only to standard VAT
Implementation Timeline
To ensure smooth enforcement, the government has set out a phased implementation schedule:
October 2024: Vaping Products Duty and the stamp scheme confirmed in the Autumn Budget, followed by a technical consultation on compliance
Autumn 2025: Planned submission of formal legislation to Parliament
1 April 2026: Registration opens for businesses to apply for duty stamps and tax authorization; overseas manufacturers must appoint UK representatives
1 October 2026: Duty and stamp requirements take effect; all UK-manufactured or imported vaping products must bear tax stamps before sale
1 October 2026 to 1 April 2027: Six-month transition period during which products manufactured or imported before 1 October may be sold without stamps
1 April 2027: End of transition period; all products on the market must carry duty stamps or face seizure and penalties
Compliance Mechanisms and Regulatory Measures
According to HMRC guidelines, the duty stamp system will combine physical stamps with digital traceability features, incorporating anti-counterfeit designs, supply chain tracking, and metadata records. Each stamped product must log key information such as manufacturer, volume, stamping date, and release date.
Overseas manufacturers wishing to apply stamps at the point of production must appoint a UK-based legal representative, who will be held financially and legally responsible for any discrepancies or misuse. Only HMRC-approved businesses may order and apply duty stamps.
In addition, the government plans to introduce a Nicotine Approval Scheme to regulate the domestic supply of nicotine, aiming to prevent the illegal circulation of concentrated nicotine and combat unregulated production.
Tax Reform Driving Structural Change in the Industry
The introduction of the UK vaping duty marks a significant shift in the country's regulatory approach to vaping. Taxation is no longer merely a fiscal tool but has become an instrument for steering product structures, curbing illicit flows, and advancing regulatory consistency across the sector.
For businesses, this policy will significantly impact product formulation, packaging standards, supply chain management, and pricing strategies. Preparing for registration, integrating with the duty stamp system, and aligning product lines with the new rules will be core compliance priorities before 2026.
From a regulatory design perspective, the UK's adoption of a flat-rate duty combined with a stamp-based compliance system offers a clear reference model for international markets. It also sends a strong policy message that vaping products, as alternatives to combustible tobacco, are being incorporated into the same regulatory category. This transformation not only reshapes the regulatory landscape in the UK but is also expected to exert long-term influence on how other jurisdictions approach vaping industry governance.
Vape taxes in European countries
Currently, the EU does not uniformly mandate member states to levy a consumption vape tax. However, many member states have included e-liquid in their consumption tax categories, with taxation based on the volume of e-liquid. Over half of the 27 EU member nations have implemented vape taxes.
Bulgaria
In December 2022, Parliament approved an amendment of the Law on Excise and Tax Warehouses to introduce excise duty and tax stamps for nicotine-containing e-cigarettes. It includes nicotine-containing e-cigarettes in the category of tobacco products for tax purposes, and requires manufacturers and importers of nicotine vapour products to obtain permits to trade in tobacco products and a tax warehouse licence.
The excise tax came into force on 1st March 2023 at BGN0.18 (approximately €0.092) per ml in 2023, and it will rise to BGN0.25 (approximately €0.13) in 2024 and BGN0.35 (approximately €0.18) in 2025. Tax stamps would be mandatory from 31st December 2023.
Denmark
Act 2616/2021 imposes excise duty on nicotine-containing e-liquids. E-liquids with nicotine of up to 12 mg/ml are taxed at DKK1.50 (approximately €0.20) per ml, while those with nicotine above 12 mg/ml will be taxed at DKK2.5 (approximately €0.34) per ml. They do not levy tax on zero-nicotine e-liquids.
Tax stamps are obligatory and their cost is determined based on the nicotine concentration in the e-liquid, as verified by the Customs Authority. The form for requesting these stamps is available on the authority's website and can be accessed by companies that have already registered.
Finland
The Tobacco Tax Act imposes an excise tax on e-liquids (with or without nicotine) of €0.30 per ml. This tax rate has remained steady since its introduction on 1st January 2017.
We believe the tax on these products could change. This might happen if they are included in the new European Commission proposal. The proposal aims to update the 2011/64/EC directive on tobacco taxes.
Germany
The Tobacco Tax Act set a €0.20 per ml excise tax for e-liquids with or without nicotine. The rate will increase to €0.26 from 1st January 2025 and €0.32 from 1st January 2026.
Italy
1. Tax Rate Structure
€0.0875 per ml（Nicotine-Free E-Liquids/Nicotine-Containing E-Liquids ）
2. Tax Calculation Formula
New Formula: Tax per ml = Cigarette Unit Tax × 5.63
Cigarette Unit Tax (2025): €0.015548 per cigarette
Example: €0.015548 × 5.63 = €0.0875/ml
Abolished: Previous 15%/10% discounts for nicotine/non-nicotine liquids.
Operators must declare shipped volumes and taxes to ADM (Agenzia delle Dogane e dei Monopoli) every 15 days via Form DM10 (digital).
Tax Payment:Paid via F24 Form (bank/PagoPA system).
New Stamp Requirement (2025):Contrassegno fiscale (tax stamp) mandatory for all e-liquids.
Cost: €0.03 per stamp.
Function: QR code links to ADM database for traceability.
Montenegro
The Republic of Montenegro has amended its excise tax to include e-liquids. According to the Excise Tax Act, a rate of €0.90 per ml applies to all e-liquids, with or without nicotine.
Article 49b of the excise law states that e-liquids are meant to be inhaled as vapor without burning. They are used as a tobacco substitute for e-cigarettes, whether they contain nicotine or not.
Tobacco Tax Adjustments (Effective February 2024):
Cigarettes: Increased from €49 per 1,000 sticks → €50.50 per 1,000 sticks (+3%)
Smokeless Tobacco: Increased from €145 → €190 (+31%)
Norway
2025 Norway E-cigarette Taxation System
1. Nicotine-containing e-liquids:
• 5.11 NOK per ml (≈0.45 EUR/ml)
• Applies only to EU Tobacco Products Directive (TPD)-compliant products (legalized from January 2024)
2. Nicotine-free e-liquids: Tax exempt
3. Hardware devices: Subject only to 25% VAT (no excise duty)
Poland
Polish lawmakers decided in November 2019 to amend the Excise Tax Act and set the tax rate on all e-liquids regardless of nicotine presence at PLN0.55 (approximately €0.13) per ml, which came into force on 1st October 2020.
In 2020, Poland imposed an excise tax stamp for e-liquids.
Products placed on the market before the 1st of January need to carry a “legalization stamp", costing PLN5 (approximately €1.10) per stamp. On 1st May 2021, the temporary grace period, which exempted these products from this requirement, ended.
Products placed on the Polish market after 1st January 2021 are required to carry thestamp.
According to a Ministry of Finance regulation, non-adhesive tax stamps can also now be used for e-liquids. This decision was taken due to a shortage of glue and the high demand FOR the only company able to produce the excise stamps.
The two types of stamps are:
Adhesive stamps: the stamps are bought in packages of 1,000 units at a cost of PLN47.84 (approximately €10.25) per package, meaning that each stamp costs around PLN0.047 (approximately €0.01)
Non-adhesive stamps: these can be acquired at a lower price of PLN21.09 (approximately €4.50) for 1,000 units, meaning that each stamp costs around PLN0.021 (approximately €0.0042).
Imported products must also carry a specific stamp. This stamp can also be adhesive or non-adhesive. The fees are the same as indicated above.
The Ministry of Finance publishes a guide on the taxation of e-liquids every year.
Portugal
As of 1st January 2024,nicotine-free e-liquids are taxed at €0.175 per ml and nicotine-containing e-liquids aretaxedat €0.351 per ml.
Tax authorities reported that the revenue from e-liquid taxes in 2022 amounted to €2.7m.
Products subjected to tobacco tax, including nicotine-containing e-liquids, need to carry an excise stamp. The stamp for the 2023 financial year must be a magenta (pinkish-purple) color, and the unit price is:
· €0.00472 for the non-adhesive version
· €0.03327 for the adhesive version
Sweden
Two different tax rates apply to nicotine-containing e-liquids. The current excise duty, which came into force on 1st July 2018, was imposed by Law 2018:696 on excise duties for nicotine-containing products, published in the Swedish Code of Statues along with an implementing regulation (2018:704).
As of 1st January 2021, a definition for highly concentrated e-liquids is introduced in the law on tax for certain nicotine-containing products. Highly concentrated e-liquids are e-liquids with a concentration of nicotine that amounts to a minimum of 15 mg/ml and a maximum of 20 mg/ml. Highly concentrated e-liquids are taxed at a rate of SEK4,000 (approximately €367) per l while nicotine-containing e-liquids with a nicotine concentration up to 15 mg/ml are taxed at a rate of SEK2,000 (approximately €184) per l.
A tax exemption applies for goods brought into the country by an individual if they are intended for personal use, up to a maximum of 20 ml of e-liquid per person per occasion.
Ukraine
The Law On Customs Tariffs imposes import duty on e-liquids with and without nicotine contained in cartridges, refill containers and other containers in the form of an ad valorem tax rate of 3% per l.
The State Tax Service of Ukraine reported that under the amendments to the Tax Code of Ukraine, as of 1st January 2023, the excise tax for e-liquids with and without nicotine is set at a rate of UAH10,000 (approximately €248) per l. The rate will be valid during the state of martial law or emergency.
The State Tax Service reported that e-liquids with and without nicotine are required to have excise stamps by the Regulation on Excise Stamps. The cost of one stamp has increased from UAH0.091 (approximately €0.0022) to UAH0.1643 (approximately €0.0041), starting from 12th April 2023.
Bill 8286 introducing electronic excise stamps and enabling traceability of vapour products passed its first reading in January 2023 and is awaiting its second reading. If adopted, it would enter into force on 1st January 2024.
References
ASH comment on Budget decisions on tobacco and vaping
Learn more
Regulations, Taxes, Registration for E-cigarettes in the UAE and Dubai
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