Tobacco Duty on Heated Tobacco

Heated tobacco products are relatively new on the market, and as such, they come with their own regulations. In this article, we are going to discuss the Tobacco Duty on heated tobacco, who it might affect, and what it is, amongst other things.

What is Heated Tobacco?

At a guess, we assume you know what heated tobacco is but for the uninitiated, let’s explain. Heated tobacco uses a heating element that heats up nicotine-containing tobacco without combustion.

So unlike regular cigarettes, heated tobacco doesn’t burn or produce smoke. It’s touted as a less harmful alternative to smoking cigarettes. As they are smokeless products, the chemicals released are much less than those from cigarettes.

But, while they may produce fewer harmful chemicals than cigarettes, they still contain nicotine, which is highly addictive and can have negative effects on the body.

What is Tobacco Duty?

It’s no secret that tobacco isn’t good for you, and it appears the government agrees – with its hefty taxes on tobacco products. When you buy cigarettes or other tobacco products, an additional cost is tacked onto the purchase price called tobacco duty.

Tobacco duties are payable at different levels by tobacco manufacturers. Heater tobacco is a relatively new duty category introduced to the Tobacco Products Duty Act 1979 (TPDA) in July 2019.

The duty is levied on a risk-based approach, with cigarettes being subject to higher duties than other tobacco products.

• Cigarettes are taxed at £262.90 for every 1,000 cigarettes plus 16.5% of the retail price or £347.86 for every 1,000 cigarettes.
• Cigars – has a tobacco duty of £327.92 per kg
• Hand-rolling tobacco – is taxed at £302.34 per kg
• Heated tobacco products – are taxed at £270.22 per kg
• Other smoking tobacco and chewing tobacco – are taxed at a rate of £144.17 per kg

In certain cases, for instance, if tobacco products are to be used for scientific or medical research, the duty rate can be waived if agreed upon by HM Revenue & Customs.

It doesn’t just stop with these tax duty rates; VAT is also applicable for heated tobacco products. Currently, the VAT rate is 20% and applies to all heated tobacco products regardless of their value.

What’s the Importance of Tobacco Products Duty?

You can look at this through a cynical or less-cynical lens, but whatever your stance, HM Treasury raises a significant amount of revenue from tobacco duty. It was estimated that around 10.27 billion British pounds were raised in 2021/22 from tobacco duty.

The high taxes are designed to reduce tobacco consumption, and a large proportion of the revenue is invested in public health initiatives and services.

Tobacco duty affects tobacco manufacturers and consumers in equal measure, though the burden falls more heavily on the shoulders of the latter. The high taxes baked into cigarettes and other tobacco products’ prices make them more expensive than many other consumer goods.

What’s the Alternative?

There is no excise duty paid on e-cigarettes or vapour products in the UK, making them a cheaper alternative to traditional cigarettes.

And as far as health benefits go, there is some evidence that e-cigarettes reduce the risk of smoking-related diseases compared to combustible cigarettes. But they aren’t totally risk-free; the chemicals used in e-cigarettes can still be harmful.

An even better option is the innovative new NEAFS sticks, an alternative to heated cigarettes that will revolutionise your smoking experience. NEAFS sticks use a unique blend of tea leaves to provide a refreshing and authentic alternative to traditional and heated cigarettes.

Both nicotine and nicotine-free options are available in several different flavours ranging from classic original to menthol, Mojito, coffee, strawberry, and blueberry.

And as there’s no tobacco, you get a product that offers no smoke, odour, ash, or tar. By replacing tobacco with high-quality tea leaves, there’s also no duty levied on NEAFS products meaning that you won’t have to pay inflated prices to enjoy them.

Final Thoughts

In conclusion, tobacco duty on heated tobacco products in the UK has been increasing in recent years and is likely to continue to do so. This can make these products more expensive for consumers and may be a deterrent for those looking to quit smoking or reduce their tobacco use.

For this reason, it may be worth considering alternative options such as NEAFS sticks or e-cigarettes. These alternatives are generally considered to be healthier than heated tobacco products. In addition, they are often more affordable as they come without the burden of tobacco duty taxes.

While no tobacco product is completely risk-free, switching to alternatives such as NEAFS sticks or e-cigarettes can be a safer and more cost-effective way to satisfy the desire to smoke. For those looking to cut back on their tobacco use or quit smoking altogether, exploring these options may be a good place to start.

FAQs

Is tobacco duty the same for all tobacco products?

No, tobacco tax treatment varies depending on the type of tobacco product. Cigarettes are taxed at a higher rate than rolling tobacco, and heated tobacco products are taxed at a different rate again.

Can I avoid paying tobacco duty by buying tobacco products online or from abroad?

Tobacco duty must be paid on all tobacco products that are sold in the UK, regardless of where they are purchased from, be it an online retailer or your local corner shop.

If you bring tobacco products into the UK from abroad, you’ll be asked to pay customs duties if you exceed the duty-free allowance. If you are caught importing tobacco products without paying duty, you may face a hefty fine or even prosecution.

Can the tobacco duty rate for heated tobacco products be changed in the UK?

Yes, the UK government is free to change the duty rate up or down whenever they so choose. However, it’s more likely to go up than down!