The UK Government is preparing to introduce a new excise regime for vaping products that will bring the industry into line with the treatment already familiar to alcohol and tobacco. Central to this are the Vaping Products Duty, known as VPD, and the Vaping Duty Stamps Scheme, referred to as VDS.
Together they are designed to enhance traceability, limit the circulation of illicit or untaxed products, raise revenue for the Exchequer, and impose a regulatory discipline on a market that has until now been lightly taxed compared to cigarettes.
The duty is a tax that applies to vaping liquid regardless of whether nicotine is present. That means not only nicotine-containing e-liquids are affected, but also liquids made only of propylene glycol, vegetable glycerine, flavourings, and other substances intended for inhalation via a vaping device. The rate has been set at £2.20 for every ten millilitres of liquid, which equates to 22 pence per millilitre. The stamps scheme sits alongside this. All vaping products intended for retail sale in the UK will need to carry a duty stamp on their packaging. That stamp will have both physical security features and digital traceability, such as QR codes, and will be affixed in a way that creates a tamper-evident seal. Once implemented, the consumer will be able to tell immediately whether the product they are purchasing is legally compliant and duty-paid, while regulators and trading standards officers will have a tool to track product movement through the supply chain.
Timelines, requirements, and compliance
The duty and stamps scheme will be phased in over several stages. From 1 April 2026, businesses that manufacture, import, or store vaping products in the United Kingdom must seek approval from HMRC. This requirement extends even to overseas manufacturers, who must appoint a UK-based representative to manage compliance. HMRC has indicated that applications for approval can take up to forty-five working days to process, which means businesses that delay could risk falling behind the deadlines.
If a business is not approved by HMRC before 1 October 2026, it will not be able to produce vaping products in the UK and can face criminal and civil sanctions, including imprisonment.
The first key payment date is 1 October 2026. From then, duty must be paid on vaping products when they are released for sale or supplied in the UK, and duty stamps must be affixed to all retail packaging i.e. on each package. While it has not been mentioned in the guidance, Rachel Nixon, HMRC’s Director of Indirect Tax has reaffirmed that “Early preparation is essential to ensure a smooth transition and to avoid disruption to operations. From 1 October 2026, vaping duty stamps must be attached to individual vaping products sold or supplied in the UK. A six-month grace period will apply to older vaping stock already in place for retail sale.”(https://www.thebwa.com/countdown-to-vaping-products-duty-and-stamps-scheme-what-businesses-need-to-know)
By 1 April 2027, the regime reaches full implementation. From that point, every vaping product outside of a duty-suspension warehouse must carry a fully compliant vaping duty stamp. Unstamped products held outside approved warehouses will be subject to seizure, and the businesses involved risk civil penalties or criminal prosecution. Monthly duty returns must be filed with HMRC by the 7th day of the month following the reporting period (calendar month), and payments will typically be due by the fifteenth of the following month.
Businesses are required to maintain detailed records covering operational plans, layouts of premises, stock control, and batch traceability, all of which may be inspected by HMRC. Approved warehouses and production facilities must also meet the government’s requirements for security and access control.
The consequences of non-compliance are serious. Failure to obtain approval, manufacturing or importing outside the authorised regime, selling or distributing unstamped goods, or breaching storage rules can all result in goods being seized, fines imposed, approvals cancelled, or, in serious cases, custodial sentences. The government is making clear that enforcement will be central to the success of the scheme, as stamping without follow-through would risk fuelling counterfeiting or other illicit practices.
Why Now? The political and social context
The timing of the new regime is no coincidence. Several forces have converged to persuade the government that the vaping industry should no longer be left largely untaxed and unregulated in excise terms.
One driver is the rapid growth of the vaping market. In just over a decade, vaping has gone from niche hobby to mass consumer product. Industry data suggests that the UK vaping sector is now worth more than £1.5 billion annually, with millions of regular users. In fiscal terms, it has become impossible for the Treasury to ignore a consumer product of such scale when alcohol, tobacco and even soft drinks are subject to specific levies. A vaping duty provides a new revenue stream at a time when public finances remain stretched.
Another driver is public health. Vaping has been promoted as a harm-reduction alternative to smoking, and there is evidence it has helped many smokers’ transition away from cigarettes. But concerns have mounted over youth uptake, the marketing of brightly packaged disposable vapes, and uncertainty about long-term health effects.
By taxing vaping products and requiring duty stamps, the government hopes both to discourage casual consumption and to place tighter controls on supply chains. Ministers have been clear that they do not want to see a new generation hooked on nicotine under the assumption that vaping is entirely risk-free.
A third factor is international comparison. Other countries, particularly in the EU, have already moved to tax vaping liquids and impose traceability rules. For example, Germany and Italy both have excise duties on e-liquids, and the European Commission has explored common frameworks. The UK, having left the EU, still wants to align its excise framework with international norms to prevent the UK from becoming a low-tax haven for vaping imports. The duty and stamps scheme helps create a system consistent with global standards, making cooperation on enforcement and trade easier.
Finally, there is a practical enforcement motivation. The government has faced growing problems with illicit disposable vapes flooding the UK market, often sold without age checks and imported outside legitimate channels. By requiring all products to carry an HMRC-issued duty stamp with security features, the authorities can more easily identify illegal goods and shut down rogue traders. In this sense, stamping is not just about tax collection but about restoring order to a chaotic and often under-regulated retail environment.
Implications and challenges
The implications of the new duty and stamps scheme for the vaping industry are profound. Costs will rise. A flat rate of £2.20 per ten millilitres (the size of the average refill) adds significantly to the base price of liquids, and while larger producers may absorb some of that increase, most of the cost will inevitably be passed down the supply chain to wholesalers, retailers, and ultimately consumers.
The government acknowledges that this may reduce consumption, which aligns with its broader public health agenda, but it also carries the risk of encouraging illicit trade if enforcement and traceability are not robust enough to keep cheaper untaxed products out of circulation.
The administrative burden on businesses is also considerable. Applications to HMRC, preparation of detailed business plans, maintenance of secure warehouses, adoption of packaging systems that allow for tamper-evident duty stamps, integration of digital traceability technology, and the filing of monthly returns all represent new layers of compliance.
Larger and better resourced firms may cope with these changes more easily, but smaller importers, independent brands, and start-ups could find the requirements costly and difficult to manage. The vaping industry has historically been characterised by many small and agile businesses, and for some of them the new scheme may be a tipping point that forces either consolidation or exit from the market.
Retailers and wholesalers will also need to adapt. They cannot simply rely on suppliers’ assurances; due diligence will become essential to avoid liability for holding or selling unstamped or non-compliant stock. The need to verify that goods come from approved sources and carry the proper stamps will add complexity to everyday trading practices.
Overseas manufacturers must appoint UK representatives and establish arrangements for stamping before importation or immediately after arrival, depending on their logistics. These are not trivial adjustments, particularly for firms accustomed to lighter regulation.
The quoted transitional period is meant to smooth the changeover, but even with transitional stamps available there is a risk of disruption. If HMRC is slow to process applications, or if the specialist supplier responsible for producing the duty stamps struggles to meet demand, stock could be delayed, shipments stranded, and retailers left with gaps on their shelves. Enforcement will need to strike a balance between rigor and pragmatism during this transition, but HMRC has made clear it will not tolerate deliberate breaches.
For consumers, the impact will be felt most obviously in higher prices. Some brands may vanish from the shelves if smaller players cannot adapt, and packaging is likely to change as duty stamps and tamper-proof seals become mandatory. There may be a contraction in variety and an increase in uniformity, as businesses rationalise their ranges to keep costs manageable. For those who view vaping primarily as a tool to reduce or quit smoking, higher costs could be discouraging, although public health advocates may welcome any reduction in overall usage.
It may also encourage smuggling in personal baggage when consumers purchase from abroad. Vaping products are not expressly listed in the duty-free allowances when consumers come into the UK, although there is an overall monetary limit for goods of £390. Such an amount could allow a significant number of vaping products to be brought into the UK with little scrutiny, undermining the domestic suppliers and those importers who comply with the new rules.
The Vaping Products Duty and the Vaping Duty Stamps Scheme represent a decisive step in the UK’s regulation of the vaping market. They are intended to align taxation with health objectives, to ensure fair competition by tackling illicit products, and to generate revenue.
But the success of the schemes will depend on the readiness of the industry to comply, the effectiveness of HMRC in processing approvals and enforcing rules, and the ability of the market to adapt to new costs and new processes without driving consumers into unregulated channels. The vaping sector now faces a period of significant adjustment, and businesses that have not yet begun preparing should do so urgently, as the key implementation dates are rapidly approaching and the consequences of delay could be severe.
There is a certain irony in the insistence of duty stamps with HMRC having concluded that duty stamps for alcohol are not working to monitor alcohol manufacture and imports. The requirement for alcohol duty stamps has now been removed.
Tobacco products have a fiscal mark which contains the words “UK DUTY PAID” in a black bordered white box (In Helvetica black script). This seems somewhat lighter a touch than the duty stamps required for vaping products.
If your business will be affected by these changes, get in touch today to discuss how to navigate the new requirements and stay ahead of the regulatory curve.
