Tax on vapes and tobacco to ramp up as alcohol duty frozen in budget
Vapes and e-liquids are set to incur higher taxes in the UK, according to measures rolled out in the spring budget on Wednesday, alongside a public consultation on their use.
The move, Jeremy Hunt said in Parliament, aims to "discourage non-smokers from vaping" and is set to take hold in October 2026.
Hunt also rolled out a one-off increase to tobacco duty to "maintain the financial incentive to choose vaping over smoking."
Meanwhile, a freeze to alcohol duty was extended by six months and, rather than finishing in August this year, will run to February 2025.
The move aims to support breweries, distilleries and other hospitality venues, Hunt said.
Read more: Budget 2024 live: Hunt cuts national insurance by 2p and freezes alcohol duty
Hunt rolled out the "Brexit pubs guarantee" in November last year, meaning that duty on a pint in the pubs is always lower than in the shops.
The freeze means that there will be no increase in the price of beer, cider, wine or spirits until February next year.
At the Autumn Statement, we froze alcohol duty for six months to provide stability for businesses.
Today we’re extending the duty freeze further – from Aug 2024 to 1 Feb 2025.
Cutting costs for breweries, distilleries, restaurants, nightclubs, pubs & bars. pic.twitter.com/hNvjDt8FDW— HM Treasury (@hmtreasury) March 6, 2024
Hospitality industry reactions
The move comes as calls from food and drink industry bodies for continued support to the sector have intensified amid high inflation.
In February, the Wine and Spirit Trade Association (WSTA) called on the chancellor to take action to recover almost £600m in losses to Treasury coffers, arguing that a duty cut would prevent further inflation-fuelling price rises, support business and boost revenue to the Exchequer.
WSTA said HMRC data suggested the Treasury lost £436m in excise duty receipts for wine and spirits between September and January compared with the same period a year earlier.
This increased to £600m once losses from beer and cider were added, WSTA claimed.
After the announcement on Wednesday, the WTSA said: "This will help to keep price rises down for consumers for a period.
"We are pleased that government has now recognised that duty hikes are bad for businesses, bad for consumers and bad for the Exchequer."
Watch: Rishi Sunak heckled over alcohol duty rises as he pulls a pint
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