Increases to tobacco duty rates from 22 November 2023
Published 22 November 2023
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Who is likely to be affected
Manufacturers, importers, distributors, retailers and consumers of tobacco products. Tobacco products include cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco, tobacco for heating and herbal smoking products.
General description of the measure
This measure sets out how tobacco duties will increase on 22 November 2023.
Policy objective
The government is committed to maintaining high tobacco duty rates. This is an established tool to reduce smoking prevalence and ensure that tobacco duties continue to contribute to government revenues.
The ‘tobacco duty escalator’, which increases duty in line with the Retail Price Index (RPI) +2% at each Budget, was extended at Budget 2020 until the end of the current Parliament. In addition, increasing the duty rate on hand-rolling tobacco above the duty escalator will narrow the gap between hand-rolling tobacco and cigarette duty rates.
Background to the measure
As announced at Autumn Statement 2023, the duty rate on all tobacco products will increase by the tobacco duty escalator of 2% above RPI inflation. The duty rate for hand-rolling tobacco will rise by an additional 10%, to 12% above RPI inflation. These changes will apply from 6pm on 22 November 2023.
Detailed proposal
Operative date
The new tobacco duty rates will have effect from 6pm on 22 November 2023.
Current law
The table of duty rates on tobacco products is in Schedule 1 to the Tobacco Products Duty Act 1979 (TPDA).
Proposed revisions
Legislation will be introduced in Autumn Finance Bill 2023 to increase the rates of duty on tobacco products. The legislation will amend Schedule 1 to the TPDA and makes consequential changes to the simplified calculations contained within the Travellers’ Allowances Order 1994.
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| +40 | +85 | +90 | +95 | +100 | +100 |
These figures are set out in table 5.1 of Autumn Statement 2023 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Statement 2023.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will impact on individuals who smoke by increasing the price of tobacco products. Heavy smokers will face the highest burden from this measure.
In response to higher prices, some individuals could choose to consume less, some could down-trade from more expensive to cheaper tobacco products and others could engage in cross-border shopping or purchase from the illicit tobacco market. HMRC will monitor and respond to any potential shift in illicit consumption as part of its strategy to combat tobacco fraud.
Customer experience is expected to stay broadly the same as this measure only increases the price of tobacco products.
The measure is not expected to impact on family formation, stability, or breakdown.
Equalities impacts
Due to differences in tobacco consumption, any change to tobacco duties will have equalities impacts. Men (14.6%) are slightly more likely to smoke than women (11.2%).
Younger people are also more likely to smoke than older people. People aged 25 to 34 years have the highest proportion of smokers (16.3%). Over 65s having the lowest proportion of smokers (8.3%).
Impact on business including civil society organisations
This measure is expected to have a negligible impact on fewer than 30 manufacturers and importers. They will face an increase in tobacco duty rates that they are likely to pass on to consumers.
There will be a negligible one-off cost to these businesses of familiarisation and amending systems to reflect the new rates. It is not expected there will be any continuing costs.
Customer experience is expected to stay broadly the same as this measure does not present a significant change for tobacco manufacturers and importers.
There is no impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
HMRC will need to make changes to IT systems to deliver this change, at an estimated cost of £30,000.
Other impacts
Health impact assessment: any reduction in smoking prevalence will have a positive impact on health and reduce the cost to the NHS of smoking-related illness. There may be reductions in other costs that arise from tobacco use.
These costs include losses in productivity from smoking breaks and ill-health absences, the cost of cleaning up cigarette butts, the cost of smoking-related house fires and the loss in economic output from people who die from diseases related to smoking or exposure to second-hand smoke.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax receipts.
Further advice
If you have any questions about this change, please contact the General Enquiries Helpline on Telephone: 0300 200 3700.