Correction Slip

The United Kingdom is set to introduce a new excise duty on vaping products, known as the Vaping Products Duty (VPD), effective from 1 October 2026. This new duty, legislated primarily through the Finance Act 2026 and detailed in accompanying secondary legislation such as The Vaping Duty Stamps (Requirements, Reviews and Appeals) Regulations 2026 (S.I. 2026/338), aims to reduce the affordability and appeal of vaping, particularly among young people. The VPD will apply a flat rate of £2.20 per 10 millilitres of vaping liquid, irrespective of nicotine content, and will be enforced through a comprehensive Vaping Duty Stamps (VDS) scheme. Manufacturers, importers, and distributors of vaping products face significant new compliance obligations, including registration with HMRC and the mandatory affixing of duty stamps to retail packaging.

The landscape of nicotine product regulation in the United Kingdom is undergoing a significant transformation with the impending introduction of a new excise duty on vaping products. This development, spearheaded by the government's commitment to public health objectives, particularly concerning youth vaping, marks a pivotal shift in how these products are treated within the UK's tax and regulatory framework. The new regime, known as the Vaping Products Duty (VPD), is set to come into force on 1 October 2026, fundamentally altering the operational and financial considerations for businesses across the vaping supply chain.

This article delves into the intricacies of the new excise duty, examining its legislative underpinnings, scope, and the critical role of the accompanying Vaping Duty Stamps (VDS) scheme. It will explore the practical implications for legal professionals and their clients, highlighting the compliance challenges and strategic adjustments necessitated by this regulatory evolution. The introduction of VPD, alongside the VDS scheme, represents a comprehensive effort to integrate vaping products into the established excise duty system, drawing parallels with existing duties on tobacco and alcohol.

Central to this new framework are The Vaping Duty Stamps (Requirements, Reviews and Appeals) Regulations 2026 (S.I. 2026/338), which provide the detailed administrative and enforcement mechanisms for the duty stamps. These regulations are intended to be read in conjunction with the broader Vaping Products (Production, Duty Stamps and Commencement) Regulations 2026 (S.I. 2026/331), collectively establishing a robust system for the taxation and control of vaping liquids.

Prior to these new measures, vaping products in the UK were primarily regulated under consumer protection and product safety legislation, notably The Tobacco and Related Products Regulations 2016 (S.I. 2016/507). These regulations address aspects such as nicotine content limits, tank capacities, labelling, and advertising, aiming to ensure product safety and responsible marketing. However, there was no specific excise duty levied on vaping products, distinguishing them from traditional tobacco products which have long been subject to significant excise taxation.

The rationale behind introducing the Vaping Products Duty stems from a dual policy objective. Firstly, the government aims to reduce the affordability and appeal of vaping products, particularly among non-smokers and young people, thereby curbing the uptake of vaping. Secondly, it seeks to generate revenue while maintaining a financial incentive for adult smokers to transition to less harmful alternatives. The decision to implement a flat rate duty, rather than a tiered system based on nicotine content, was made following public consultation, with the aim of simplifying administration and aligning with international counterparts.

Excise duties are indirect taxes levied on specific goods, typically at the point of manufacture or import, and are a well-established feature of the UK's tax system, particularly for goods like alcohol and tobacco. The Vaping Duty Stamps scheme is a compliance measure designed to support the administration and enforcement of the VPD, akin to fiscal markings on tobacco products. These stamps serve as a visible indicator that the required duty has been accounted for, aiding in traceability and combating illicit trade.

The Vaping Products Duty (VPD) is introduced by the Finance Act 2026, which provides the primary legislative framework, and will be integrated into the existing excise regime governed by the Customs and Excise Management Act 1979 (CEMA 1979). The duty applies to all vaping liquid intended for vaporisation, including those containing nicotine, nicotine-free liquids, and even ingredients for home mixing such as propylene glycol, vegetable glycerine, and flavourings. A flat rate of £2.20 per 10 millilitres of vaping liquid will be charged, irrespective of nicotine strength. This duty is in addition to the standard 20% Value Added Tax (VAT), meaning the effective price increase for consumers will be higher than the duty rate alone.

Complementing the VPD is the Vaping Duty Stamps (VDS) scheme, which mandates that all retail packaging for vaping products must carry a physical duty stamp. The Vaping Duty Stamps (Requirements, Reviews and Appeals) Regulations 2026 (S.I. 2026/338) and The Vaping Products (Production, Duty Stamps and Commencement) Regulations 2026 (S.I. 2026/331) provide the detailed regulatory framework for this scheme. From 1 October 2026, all new vaping products manufactured in or imported into the UK must bear these stamps. A critical date for compliance is 1 April 2027, after which it will be illegal to sell any vaping product in the UK without a valid duty stamp, even if it was manufactured or imported before the duty came into effect.

The VDS scheme introduces stringent requirements for businesses. Manufacturers, importers, and those storing vaping products in duty suspension must apply for approval from HMRC, with applications opening on 1 April 2026. The stamps themselves are designed with physical and digital security features to verify duty payment and enable traceability throughout the supply chain. The Regulations also amend the Finance Act 1994 to ensure that decisions relating to UK representatives under the VDS scheme are subject to established review and appeal processes, providing a mechanism for dispute resolution.

This new framework represents a significant expansion of excise controls, extending them to a product category previously outside this regime. The shift from a potential tiered duty structure to a flat rate simplifies administration but may have disproportionate impacts on different product types, such as larger volume shortfills compared to pre-filled pods. The legislation also makes it illegal to manufacture vaping products in unapproved premises from 1 October 2026, including the mixing of non-duty paid liquids for personal use, underscoring the broad reach of the new controls.

The introduction of the Vaping Products Duty and the Vaping Duty Stamps scheme from 1 October 2026 represents a profound change for the UK vaping industry. Legal professionals must advise clients on the immediate and ongoing compliance obligations, which include securing HMRC approval for manufacturing, importing, or storing vaping products, and ensuring all retail packaging carries the requisite duty stamps by the specified deadlines. The transitional period until 1 April 2027 for existing unstamped stock is crucial, requiring careful inventory management and strategic planning to avoid penalties for non-compliance.

Practitioners should guide businesses through the complexities of the new excise regime, including understanding the duty point, payment mechanisms, and the implications of the flat rate duty on pricing strategies and supply chain logistics. Furthermore, the interplay between the new excise duties and existing product safety regulations under The Tobacco and Related Products Regulations 2016 will require careful navigation. Clients should be made aware of the review and appeal mechanisms available under the Finance Act 1994, as amended by the new regulations, for challenging HMRC decisions. This comprehensive regulatory overhaul necessitates proactive engagement from all stakeholders to ensure a smooth transition and continued lawful operation within the evolving UK vaping market.