Category: Duties

Businesses in the vaping sector are reminded that the new Vaping Products Duty and the Vaping Duty Stamps Scheme will take effect from 1 October 2026. HMRC is urging manufacturers, importers, wholesalers and retailers to make sure they are ready for the introduction of the Vaping Products Duty and the associated Vaping Duty Stamps Scheme.

Vaping Products Duty is intended to form part of the government's wider measures to tackle youth vaping, improve public health and support its ambition to create a smoke-free generation. The duty is expected to raise more than £550 million a year by 2030–31.

The new rules will affect the supply chain in different ways. Businesses that manufacture vaping products or handle products under duty suspension need to ensure they have the necessary HMRC approvals before the new regime begins. Retailers and wholesalers should check with their suppliers that the products they stock meet the new requirements.

UK representatives and warehousekeepers can buy transitional duty stamps until 30 November 2026 and affix them until 31 December 2026. From 1 January 2027, only digital duty stamps can be affixed to vaping products. Retailers and wholesalers can also continue to sell eligible unstamped vaping products already held before the new rules take effect until 31 March 2027. This gives businesses some time to adjust their stock and supply arrangements. From 1 April 2027 all vaping products sold or supplied in the UK must carry a valid stamp.

Consumers will also start to see changes to vaping product packaging from October. New rules will apply to travellers bringing vaping products into the UK for personal use from 1 October 2026. There are different rules for travellers entering Great Britain and Northern Ireland.

HMRC has warned that businesses failing to comply with the new requirements could face civil or criminal sanctions.
 

The Chancellor has confirmed a series of duty increases on tobacco, vaping liquid, and alcohol that will take effect over the next year, with new rates intended to balance public health concerns with support for producers and the wider hospitality sector.

As part of the Autumn Budget measures the Chancellor announced that the duty rates on tobacco products were increased by 2% above the rate of inflation (based on RPI) effective from 6pm on 26 November 2025. The one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products and annual uprating of tobacco duty by RPI + 2% next year will take effect from 1 October 2026

It was also announced as part of last year’s Budget measures that the government will introduce a new duty at a flat rate excise duty of £2.20 per 10ml on all vaping liquid which will come into effect from 1 October 2026.

The Chancellor also confirmed that effective from 1 February 2026, the government will increase the Alcohol Duty rates in line with Retail Price Index inflation. The Small Producer Relief discounts will also be uprated, so eligible small producers receive relative duty reductions as now. These changes will also take effect from 1 February 2026.

The government considered various views, from cutting or freezing alcohol duties to increasing them above inflation. The decision they announced seeks to balance supporting alcohol producers and the hospitality sector with the need to reduce alcohol related harm.

In the Autumn Budget, the Chancellor had been expected to increase fuel duty rates. However, she has extended the fuel duty cut for a further 6 months to help support households and businesses. 

The Chancellor said ‘I know that the cost of travelling to and from work is still too expensive, so I am extending the 5p cut until September 2026. And because I know that changes in wholesale prices are not always passed onto motorists, I am bringing in new rules to mandate petrol forecourts to share real-time prices through a new Fuel Finder.’ 

This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times is to be extended for a further 6 months until 31 August 2026.

The planned inflation-based increase for 2026-27 will be cancelled. Together with the launch of Fuel Finder, these measures are expected to save families £89 next year compared to previous plans.

In the Autumn Budget, the Chancellor had been widely expected to increase fuel duty rates. However, in a surprise announcement she extended the fuel duty cut for a further 12 months to help support households and businesses. A tax cut estimated to be worth £3 billion.

The government was facing considerable pressure from consumer and business groups to try and alleviate the pain of high fuel prices. This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times is to be extended for a further 12 months until 22 March 2026.

The assumed inflation increases in fuel duty will not now take place. This will maintain fuel duty rates at current levels for another year and represents a reduction of around 7p per litre for main petrol and diesel rates in comparison to previous plans.

As part of the Autumn Budget measures the Chancellor announced that the duty rates on tobacco products were increased by 2% above the rate of inflation (based on RPI) effective from 6pm on 30 October 2024. It was also confirmed that the duty for hand-rolling tobacco was increased by an additional 10%, to 12% above RPI inflation at the same time to narrow the gap between hand-rolling tobacco and cigarette duty rates.

The Chancellor also announced that effective from 1 February 2025, the government will increase the Alcohol Duty rates that apply to all non-draught products in line with Retail Price Index inflation. In happier news, it was announced that the government will reduce all Alcohol Duty rates for draught products by 1.7% in cash terms (or 5.1% if compared to the baseline expectation that rates would be increased with the Retail Price Index). The reduction to duty rates on draught products will result in the average alcoholic strength pint (4.58% alcohol by volume) paying 1 pence less in duty.

It was further announced that the government will introduce a new duty  at a flat rate of 22p/ml on vaping products from October 2026. This will be accompanied by a further one-off increase in tobacco duty to maintain financial incentive to choose vaping over smoking.

In the Spring Budget, the Chancellor extended the fuel duty cut for a further 12 months to help support households and businesses at a time of high oil prices. The Chancellor acknowledged that the rising price of fuel places a huge burden on families and businesses.

The government was under considerable pressure from consumer and business groups to try and alleviate the pain of high fuel prices. This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times are to be extended for a further 12 months until 22 March 2025.

The assumed inflation increases in fuel duty in 2024-25 will not now take place. This will maintain fuel duty rates at current levels for another year and represents a reduction of around 7p per litre for main petrol and diesel rates in comparison to previous plans.

As part of the Autumn Statement measures the Chancellor announced that the duty rates on beer, cider, wine and spirits would be frozen at the current rates until 1 August 2024. This change took effect from 1 February 2024 and will last for 6 months.

The alcohol duty freeze will mean that more than 38,000 pubs will benefit. Not increasing alcohol duty in line with inflation will create an effective saving of approximately 3p on the duty applied to a typical pint of beer, 2p on a pint of cider, 4p on a glass of whisky, or 18p on a bottle of wine.

The announcement of the alcohol freeze follows the simplification of alcohol duty system that was completed August 2023. This resulted in the creation of standardised tax bands based on alcohol by volume which created tax cuts on a number of popular drinks, for example, sparkling wines and ready-made drinks.

There were further changes that took effect from 1 August 2023 that resulted in individuals who drink draught products in pubs and other venues pay less tax than if buying the equivalent non-draught product in off-trade venues (such as supermarkets).

This was part of the government’s Brexit Pubs Guarantee commitment for every pint in every pub to pay less duty than their supermarket equivalent.

The Exchequer Secretary to the Treasury said:

‘The great British pub remains a critical part of communities across the country, that’s why we’re helping to keep costs low by freezing alcohol duty, reducing business rates, and supporting on energy costs.

Our decisive action has also helped to more than halve inflation last year, protecting pubs and other businesses from the higher costs they would have otherwise faced.

And we need to stick to our plan, so we can deliver the long-term change our country needs to deliver a brighter future for Britain and improve economic security and opportunity for everyone.’

HMRC has continued to tackle the UK’s most notorious hotspots for the sale and supply of illicit tobacco as part of its overall remit to tackle tax fraud. This has resulted in the seizure of more than 27 million illicit cigarettes and 7,500kg of hand-rolling tobacco.

These seizures have taken place under Operation CeCe in its first two years of action. Operation CeCe is a joint HMRC-National Trading Standards operation which has been working to seize illicit tobacco since January 2021.

New legislation has also come into effect from 20 July, which could see penalties of up to £10,000 for any businesses and individuals who sell illicit tobacco products. The sanctions will bolster the government’s efforts to tackle the illicit tobacco market and reduce tobacco duty fraud.

Illicit tobacco is defined as any tobacco product that is sold in the UK without the payment of excise duty.

HMRC’s Deputy Director for Excise and Environmental Taxes, said:

'Trade in illicit tobacco costs the Exchequer more than £2 billion in lost tax revenue each year. It also damages legitimate businesses, undermines public health and facilitates the supply of tobacco to young people.

These sanctions build on HMRC’s enforcement of illicit tobacco controls, will strengthen our response against those involved in street level distribution, and act as a deterrent to anyone thinking that they can make a quick and easy sale and undercut their competition.'

Changes in the way alcohol is taxed came into effect on 1 August 2023. The new system of calculating alcohol duty for all alcoholic drinks will be made using standardised tax bands based on alcohol by volume (ABV). This replaces the previous alcohol duty system, which consisted of four separate taxes covering beer, cider, spirits, wine and made-wine.

These changes are expected to make the system fairer and encourage more new products to enter the market. The new system sees the creation of six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

There is also more help for the hospitality industry with an increase in the draught relief duty differential. This will reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants. These changes also took effect from 1 August 2023 and mean that individuals who drink draught products in on-trade venues (such as pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (such as supermarkets).

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for eighteen months from 1 August 2023 until 1 February 2025.

There are special procedures for importing goods into the UK. Following the end of the Brexit transition period on 31 December 2020, the process for importing goods from the EU effectively mirrors the process for all other international destinations.

On 14 September 2021, a revised timetable for the introduction of full import controls was published by government. 

A number of easements had been put in place to help ensure a smooth transition for goods coming from the EU. This included a delay in the requirement for full customs declarations and controls until 1 January 2022. The timetable for this change remains as previously set out. However, safety and security declarations will now not be required until 1 July 2022.

Under the revised timetable:

• The requirements for pre-notification of Sanitary and Phytosanitary (SPS) goods, which were due to be introduced on 1 October 2021, will now be introduced on 1 January 2022.
• The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022.
• Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022.
• Safety and Security declarations on imports will be required as of 1 July 2022 as opposed to 1 January 2022. Full customs declarations and controls will be introduced on 1 January 2022 as previously announced.

It is hoped that this revised timetable will give businesses, especially those in the agri-food sector, more time to adjust for issues caused by Brexit and the global pandemic. 

Following the end of the Brexit transition period, new rules on tax and duty now apply on goods sent to the UK from overseas. These changes are meant to ensure that goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT free imports. 

For goods sold directly to customers in the UK from overseas with a value of £135 or less (which aligns with the threshold for customs duty liability) the point at which VAT is collected has moved from the point of importation to the point of sale. 

Online marketplaces that are involved in facilitating the sale, are responsible for collecting and accounting for the VAT. Business to business sales not exceeding £135 in value will also be subject to the new rules but VAT can be accounted for by way of the reverse charge.

In addition, the low value consignment relief (LVCR), which was an import VAT exemption for goods valued at £15 or less, has been removed in:

• Great Britain for goods imported from outside the UK
• Northern Ireland for goods ordered remotely that are imported from outside the UK and EU

Normal VAT and customs rules on consignments valued at more than £135 will apply on the importation of goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU.

There are different rules on the sale of goods into Northern Ireland from the EU and on the movement of goods between Northern Ireland and the EU.

The government has published the new rules for duty free and tax free shopping that will come into effect from 1 January 2021. The changes are wide ranging.

For anyone who smokes or drinks there will be no duty charged on alcohol or tobacco products from January 2021. This will apply irrespective of whether you are travelling to an EU or non-EU country. The new rules will apply to British ports, airports, international rail stations and sales on ships, trains and planes. 

There will also be new increased personal limits on what you can bring home. This means that passengers coming to Britain will be able to bring back, for example, three crates of beer, two case of still wine and one case of sparkling wine or 4 litres of spirits to GB without paying UK duties.

The government has also announced the ending of all tax free sales from January 2021. This will apply to relevant sales of tax-free transactions in airports of goods in sectors such as: electronics, fashion and beauty products and will apply to passengers travelling to non-EU countries.

It has also been announced that the VAT Retail Export Scheme is to be scrapped from 1 January 2021. This means that VAT refunds for overseas visitors in British shops will be removed. The only exception will be when an item is shipped directly from the seller to the home address of the foreign customer.

The changes will apply in England, Wales and Scotland. The rules in Northern Ireland are still under discussion.

Here is a reminder of your duty and tax free allowances if travelling abroad this Christmas.

Travelling to an EU country

Where tobacco or alcohol is brought in from another EU country, no duties or tax will be payable as long as you can demonstrate that the goods are for your own use and that you paid the relevant taxes and duties on the purchase.

However, HMRC provide the following guidelines as to an acceptable maximum for personal use. If you exceed these limits, you are more likely to be subject to further questioning.

• 800 cigarettes
• 200 cigars
• 400 cigarillos
• 1kg of tobacco
• 110 litres of beer
• 90 litres of wine
• 10 litres of spirits
• 20 litres of fortified wine (for example port or sherry)

If you are travelling outside the EU you are allowed to bring the following back to the UK for your own use without any UK tax or duty liabilities.

• 200 cigarettes or 100 cigarillos or 50 cigars or 250g of tobacco
• 4 litres of still table wine
• 16 litres of beer
• 1 litre of spirits or strong liqueurs over 22 per cent volume; or 2 litres of fortified wine (such as port or sherry), sparkling wine or other alcoholic beverages of less than 22 per cent volume.
• £390 limit for of all other goods including perfume and souvenirs. If you are lucky enough to be arriving by private plane or boat for pleasure purposes, you can bring in goods up to the value of £270 tax free.

It remains to be seen if any changes will be made to the EU limits after the Brexit transition period ends.

Here is a reminder for our readers of their duty and tax free allowances if travelling abroad this summer.

Travelling to an EU country

Where tobacco or alcohol is brought in from another EU country no duties or tax will be payable as long as you can demonstrate that the goods are for your own use and that you paid the relevant taxes and duties on the purchase.

However, HMRC provide the following guidelines as to an acceptable maximum for personal use. If you exceed these limits, you are more likely to be subject to further questioning.

• 800 cigarettes
• 200 cigars
• 400 cigarillos
• 1kg of tobacco
• 110 litres of beer
• 90 litres of wine
• 10 litres of spirits
• 20 litres of fortified wine (for example port or sherry)

Travelling to a non-EU country

If you are travelling outside the EU you are allowed to bring the following back to the UK for your own use without any UK tax or duty liabilities.

• 200 cigarettes or 100 cigarillos or 50 cigars or 250g of tobacco
• 4 litres of still table wine
• 16 litres of beer
• 1 litre of spirits or strong liqueurs over 22 per cent volume; or 2 litres of fortified wine (such as port or sherry), sparkling wine or other alcoholic beverages of less than 22 per cent volume.
• £390 limit for of all other goods including perfume and souvenirs. If you are lucky enough to be arriving by private plane or boat for pleasure purposes, you can bring in goods up to the value of £270 tax free.

The Annual Tax on Enveloped Dwellings (ATED) came into effect from 1 April 2013. The tax applies to certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect most companies, partnerships with company members and collective investment schemes. There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company.

The main ATED reliefs are broadly where the property is:

• in use for the purposes of a property rental business run commercially with a view to profit (subject to certain exceptions);
• held as trading stock of a property development or trading business (again, subject to exceptions);
• open to the public for at least 28 days a year as part of a trade carried on commercially with a view to profit;
• repossessed by a mortgage lender;
• a farmhouse, subject to meeting various conditions;
• held by a charity for its charitable purposes, subject to meeting various conditions;
• held by a registered social housing provider for qualifying purposes.

Dwellings are revalued for ATED purposes every 5 years. The definition of the ‘dwelling’ includes the garden or grounds that go with the dwelling. There are also special rules where an NNP holds an interest in more than one dwelling such as a block of flats or where they own a dwelling and non-residential land.

For the period 1 April 2019 to 31 March 2020, ATED is chargeable on property valued at:

• More than £500,000 but not more than £1 million – £3,650
• More than £1 million but not more than £2 million – £7,400
• More than £2 million but not more than £5 million – £24,800
• More than £5 million but not more than £10 million – £57,900
• More than £10 million but not more than £20 million – £116,100
• More than £20 million – £232,350.