On the 1st of October 2026, the Government is set to introduce a new Vaping Products Duty (VPD) alongside Vaping Duty Stamps. These introductions will mean all businesses working within the e-cigarette industry including manufacturers, suppliers and retailers will need to prepare and adapt to meet the new rules. This legislation comes hot on the heels of the single-use vapes ban which came into effect on 1 June 2025.
Vaping product duty
Much like excise duty on alcohol and tobacco, the new vaping product duty seeks to introduce a tax on the consumption of vaping products with the hope of disparaging the uptake and usage of vaping products and increasing the tax yield.
While a government consultation initially proposed a three-tier structure to the duty based on the nicotine strength of the vaping liquid, it is now opting for a simpler flat-rate tax of £2.20 per 10ml vaping liquid. It is hoped that a more simplistic approach will result in increased compliance and in turn lead to a reduction in the uptake of vaping products.
The liability for paying this tax will lie with manufacturers in the UK and those importing vaping products into the UK from abroad. However, as is the case with alcohol and tobacco duties, HMRC has made it clear that all parties in the supply chain must play their part to ensure compliance. This means that businesses who obtain vaping products from a supplier must also check to verify that the duty tax has been paid. To assist with this supply chain due diligence, the government is introducing Vaping Duty Stamps in conjunction with the duty.
Vaping duty stamps
Vaping Duty Stamps will be a physical stamp with digital elements incorporated to enable tracing and authentication. The physical stamp is aimed at providing a clear visual aid to support enforcement and a means to verify legitimacy. Metadata collection will include the details of manufacturer, the product that the stamp is being applied to, date of stamping and date product leaves duty suspension or date of release for consumption in the UK.
What do businesses need to do?
In the current absence of definitive legislation to confirm the precise operation of the new rules, businesses will need to begin to plan how they will operate under the new proposals. Manufacturers and importers of vaping products will need to ensure they are registered with HMRC in order to obtain vape duty stamps and become a verified supplier. Those registered businesses will also be required to calculate and pay the VPD to HMRC and be responsible for affixing each product with a vape duty stamp in advance of it being supplied to customers.
Supply chains
Other parties in the supply chain such as retailers will, upon receipt of vape products from their suppliers, need to ensure that the products have the stamp evidencing tax compliance. Supply chain due diligence obligations will become a crucial feature of this new duty and all businesses will need to ensure that they put in place reasonable and proportionate checks to identify fraudulent transactions or transactions involving goods on which duty may have been evaded.
Due diligence checks will need to be carried out on both suppliers and customers.
Consequences for failure to comply
For manufacturers and importers, penalties are likely to be imposed for failing to register with HMRC, failing to pay the duty to HMRC in a timely manner, and for failing to subsequently display the stamp on the product. As with any other tax, incomplete or inaccurate record keeping may also result in a penalty.
In regards supply chain due diligence, HMRC may seek to strengthen processes for businesses where they find insufficiencies. In serious cases, failures will result in sanctions and potentially the revocation of excise approvals and licenses, and potential criminal prosecutions Any vaping product found at any point in the supply chain without a valid vape duty stamp will most likely be seized by HMRC.
How can DWF help?
Our Tax teams regularly work with businesses of all types and sizes in relation to excise duties and duties and tax due diligence compliance.
Our team can also support your business through any HMRC enquiry or investigation or allegations of non-compliance.
Please do not hesitate to contact Caroline Colliston, Tajinder Barring, Nina Basra or your usual DWF contact.
