The cost of cigarettes has risen again after the Government increased tobacco duty from October 1, adding more to the price paid by smokers across the UK.
A Pack Of 20 Cigarettes Has Become More Expensive
Cigarettes are now subject to a duty increase linked to Retail Price Index inflation plus 2%, the standard annual tobacco tax rise.
According to HMRC estimates, the change adds around £1.21 to the price of a standard packet of 20 cigarettes. The duty on other tobacco products has also risen, with an additional £2.20 per 100 cigarettes or 50g of tobacco.
Average Price Was Already Above £16
Figures from the Office for National Statistics show that the average price of a packet of 20 cigarettes reached £16.18 in September, before the latest duty increase took effect.
The final price paid by shoppers varies between brands and retailers, as tobacco companies and retailers decide how much of the tax increase is passed on to customers.
Why Tobacco Duty Has Increased
The Government raises tobacco duty as part of its policy to discourage smoking. The latest increase was brought forward from the Budget and took effect on October 1.
This change was timed alongside the introduction of a new tax on vaping products, with the Government seeking to keep the price difference between smoking and vaping.
Vaping Tax Also Takes Effect
A new flat-rate duty of 22p per millilitre applies to vaping liquid. A typical 10ml bottle could therefore carry an additional £2.20 in duty, regardless of its nicotine content.
The new tax is designed to raise revenue while keeping tobacco products more heavily taxed than vaping products.
Tobacco Duty Is Paid By Manufacturers And Importers
Tobacco duty is charged to companies that manufacture or import cigarettes and other tobacco products into the UK. When duty rises, businesses can pass some or all of the additional cost on to consumers through higher retail prices.
The latest increase follows a 3.66% RPI inflation rate plus 2% rise applied to cigarettes in the previous Budget.
Other Budget Measures Affect Household Costs
The tobacco duty increase comes alongside several other measures announced in the Budget. The Government has also announced a minimum wage increase, a freeze in fuel duty and a £100 energy bill reduction for eligible households in council tax bands A to D.
Machine Games Duty is rising from 20% to 25%, while the bank surcharge on profits above £100 million is increasing from 3% to 6%.
For smokers, the immediate change is the higher tobacco duty already reflected in cigarette prices from October 1.
