Vape Tax: Everything you Need to Know

This is where things start to get technical, so I sat down with Richard Brookes, founder of Touch of Vape, to get his take on the upcoming vape tax and, more importantly, how it is likely to affect vape retailers.

According to Richard, the best way to understand what is about to happen in the market is to break the whole situation down into three clear stages.

“I think you need to dissect the vape tax into three stages,” he explained. “First there will be the panic buying stage, then there will be the in-between period and finally there will be the aftermath once the tax has fully settled into the market.”

Stage 1: Panic Buying

“Panic buying is definitely going to happen. That train is 100% coming. I can’t imagine a single vaper not looking to stock up before the vape tax is enforced. We’ve already seen this behaviour before. When the TPD regulations came into force in 2017 there was a wave of customers buying up products before the rules changed and the same thing happened again ahead of the disposable vape ban in 2025. Its almost systematic that each time the industry faces a major regulatory shift, customers naturally try to get ahead of it by buying what they can while prices are still lower or products are still available.

Because of that history of panic buying in the vaping industry, it feels almost inevitable that the same pattern will repeat itself with the vape tax. Customers have panic bought in the past and there is very little reason to believe they won’t do exactly the same thing again this time.”

Stage 2: The In Between Stage

“As it stands, retailers are expected to have a grace period to sell through their existing stock before moving fully onto duty paid products. The suggested transition window is from October 2026 through to March 2027.

I think this period will create disruption across the market. Larger retailers with big budgets will have the ability to stock up heavily in advance and if they do that, they could potentially sell non duty paid stock for several months while their competitors have already moved onto taxed products. Smaller retailers who do not have the cash flow to buy large quantities ahead of time may be forced to start selling duty paid stock much sooner.

That creates a situation where two shops on the same high street could be selling exactly the same product at completely different prices. One retailer might still be selling a 100ml bottle for £15 while another has no choice but to sell the same product for around £37. When the difference is that big, it is obvious which shop most customers will choose.

In my opinion, this transition period could push a lot of vape retailers out of the market. If a business does not have the budget to stockpile products in advance, it may find itself selling much more expensive duty paid stock while competitors continue selling cheaper pre tax stock. That makes the business instantly less competitive and over time customers will naturally drift elsewhere through no fault of the retailer.

At the same time, there is also a significant risk for the larger retailers who do have the ability to stock up. Buying huge quantities of stock months in advance requires a massive upfront investment. They could be committing tens of thousands of pounds without any real guarantee that the demand will still be there. Customers may have already stocked up themselves during the panic buying phase which means sales could slow down just as retailers are sitting on large volumes of inventory.

Because of all of this, the in-between stage could be the most chaotic period the vape industry has experienced so far. With massive price differences between shops, shifting demand from customers and retailers taking big financial risks on stock levels, it is likely to be a very unpredictable six months for the entire market.”

Stage 3: The Aftermath

“The biggest shift will likely happen during the six month grace period. After that point I think the market could look very different, with far fewer independent retailers and a stronger presence from larger chains that have the capital to adapt.

Many smaller businesses may find the transition extremely difficult. Some will leave the market voluntarily because the margins no longer make sense while others may simply be forced out because they cannot compete with retailers that stocked large quantities before the duty came into effect.

Consumer behaviour will also play a role. A large number of vapers may have already stocked up before the tax date while others may decide the price increase is enough to push them to quit altogether. Both outcomes reduce demand in the short term which adds even more pressure on retailers trying to survive the transition.

That is why the period after the grace window closes is the most uncertain stage. No one truly knows what the market will look like once the stockpiled products have been sold and everything on shelves carries the new duty. The structure of the industry, the number of retailers operating and even the size of the customer base could all look very different. This aftermath stage will ultimately determine whether the market stabilises or whether the industry contracts significantly.”

What Does The Government Get From This.

The HMRC published an article in November 2025 called the Introduction of Vaping Products Duty from 1 October 2026 and within this article they touch on the Exchequer impact:-

• 2026 to 2027 +£135 million

• 2027 to 2028 +£400 million

• 2028 to 2029 +£465 million

• 2029 to 2030 +£530 million

• 2030 to 2031 +£565 million

These figures are set out in Table 4.2 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Summary

The introduction of vape duty in October 2026 represents one of the most significant regulatory changes the UK vaping industry has faced. While the timeline and tax structure are now clear, the true impact of the policy will only become visible as the market moves through each stage of the transition.

The months leading up to the tax date will likely be marked by stockpiling from both retailers and consumers, followed by a six month grace period where older, non duty paid stock can still be sold. During this phase the market may become highly uneven, with some retailers able to sell products at far lower prices than others depending on their stock levels and purchasing power.

Once the grace period ends in March 2027 the industry will enter a completely new environment where every product sold must have duty paid. At that point pricing, competition and consumer demand will begin to stabilise and the long term structure of the market will become clearer. Some retailers will adapt while others may exit, and manufacturers will likely innovate to respond to the new cost pressures.

What happens after this transition remains uncertain. Consumer behaviour, regulatory enforcement and retailer adaptation will all influence how the industry evolves. What is clear is that the vaping market in the UK will not look the same after 2027, and the months surrounding the duty introduction will play a critical role in shaping its future.