United Kingdom

Background

The UK government first signaled its intention to legislate a new duty category for heated tobacco products when it released the results of its public consultation on the tax treatment of these novel tobacco products in March 2018. The announcement reflected the majority of responses to the consultation conducted earlier in the year which indicated that “a new category is the best way to capture heated tobacco products for duty purposes.”

The proposed addition of a new excise duty category to the Tobacco Products Duty Act (TPDA) was announced by HM Revenue & Customs on 6 July 2018.

Budget 2018

Later, at Budget 2018, HM Treasury announced that a new duty category ‘Tobacco for Heating’ would be introduced in Finance Bill 2018-19. The duty rate for ‘Tobacco for Heating’ will be set at the same level as hand rolling tobacco, which is currently £234.65 per kilogram. The changes went into effect on 1 July 2019.

Adjustment

The rate of excise will be adjusted for inflation each November commencing in 2020. Since last year (2020), the rate has been £243.95 per kilogram