Countdown to VPD: Protect Your Revenue

What the Vaping Products Duty Means for Your Business: The Year Everything Changes

From 1 October 2026, the UK vaping industry will undergo one of the most significant structural changes it has ever faced. The introduction of the Vaping Products Duty (VPD) and Vaping Duty Stamps (VDS) will permanently alter pricing, margins, packaging, and competitive dynamics across the entire supply chain.

For retailers, wholesalers, and distributors, this is not simply another regulatory update. It is a fundamental shift in how vape products are costed, priced, stocked, and sold.

This article is the first in our Countdown to VPD series. Its purpose is simple:

to explain what is changing, when it is changing, and why early planning will be the difference between protecting your revenue or losing it.

What Is the Vaping Products Duty (VPD)?

The Vaping Products Duty (VPD) is a new UK government tax applied to e-liquid used in vaping products. It is designed to sit alongside the existing regulatory framework governing vaping, bringing e-liquid taxation closer to other excisable products.

The key facts:

• The duty comes into effect on 1 October 2026
• It applies to all e-liquid, whether sold in retail, wholesale, or distribution channels
• It is a volume-based tax, not a percentage of price

The rate:

• 22 pence per millilitre (22p/ml)
• This equates to £2.20 added to every 10ml bottle

This duty is applied before any retailer or wholesaler margin, meaning its impact compounds as products move through the supply chain.

What Are Vaping Duty Stamps (VDS)?

Alongside the VPD, the government is introducing Vaping Duty Stamps (VDS).

From October 2026, all legally compliant vaping products must carry a physical duty stamp on the packaging. This stamp acts as visible proof that the government vape tax has been paid.

The role of duty stamps is twofold:

• Enforcement – to prevent the sale of untaxed or illicit products
• Visibility – making compliance obvious to regulators and consumers alike

For businesses, this introduces new operational considerations around packaging, stock management, and supply chain compliance.

How Much Will the VPD Add to Product Costs?

The most important number for any vape business to understand is this:

£2.20 is added to every 10ml bottle of e-liquid.

This is not an abstract figure — it has immediate, tangible consequences.

Simple examples:

• 1 × 10ml bottle → £2.20 additional cost
• Box of 10 × 10ml bottles → £22 additional cost
• 1,000 bottles → £2,200 in additional duty

For higher-volume businesses, these costs escalate rapidly. And because this duty sits at the base of the pricing structure, its impact flows through:

• Wholesale pricing
• Retail RRPs
• Promotional mechanics
• Consumer affordability

Who Will Be Impacted by the Vaping Products Duty?

A common misconception is that the VPD will mainly affect large manufacturers or national chains. This is incorrect.

Every part of the vaping supply chain will be affected, regardless of size.

This includes:

• Independent vape retailers
• Specialist vape chains
• Wholesalers and cash & carry operators
• Online retailers
• Distributors and brand owners

Whether you sell hundreds of units a week or tens of thousands, the duty applies equally per millilitre.

There is no exemption based on:

• Business size
• Sales volume
• Channel
• Customer type

The only differentiator will be how prepared you are.

The Ripple Effects: Why This Isn’t “Just a Tax”

While the headline impact of the VPD is cost, the secondary effects are where businesses will really feel the pressure.

1. Margin Squeeze
   Unless pricing strategies are adjusted, the £2.20 per 10ml increase will compress margins at every level. Absorbing the cost is not sustainable for most businesses.
2. RRP Increases
   Retail prices across the industry will rise. This is unavoidable. The challenge will be managing:
   • Price perception
   • Competitiveness
   • Customer loyalty
3. Customer Pushback
   Vape consumers are price-sensitive. Sudden increases in shelf prices can lead to:
   • Reduced basket size
   • Brand switching
   • Lower purchase frequency

   Retailers who manage the transition poorly risk losing footfall to competitors who planned ahead.

4. Competitive Imbalance
   Not all businesses will respond to the VPD in the same way or at the same time. Those who prepare early will be able to:
   • Hold prices for longer
   • Protect margin during the transition
   • Win market share while others react

The Critical Detail Many Businesses Miss: The Sell-Through Window

One of the most important — and often misunderstood — aspects of the VPD is the sell-through period.

Here’s how it works:

• Stock purchased before 1 October 2026 is not subject to the new duty
• That stock can continue to be sold until April 2027
• This creates a long sell-through window of up to six months

In practical terms, this means:

• Pre-October stock can be sold at today’s margin
• Retailers who stock up early can remain price-competitive
• Late buyers will face higher costs immediately

This window represents a once-only opportunity to protect revenue during a period of industry-wide price inflation.

Why 2026 Is the Year Everything Changes

The introduction of the VPD will permanently alter:

• How vape products are priced
• How inventory is planned
• How promotions are structured
• How consumers perceive value

After October 2026:

• Higher prices become the norm
• Duty-paid stock becomes mandatory
• Margin recovery becomes harder

The businesses that succeed will be those that treat 2025–2026 not as “business as usual”, but as a strategic transition period.

What Early Planning Looks Like in Practice

Early planning does not mean panic buying or overstocking. It means:

• Understanding your current volumes
• Modelling the impact of £2.20 per 10ml on your range
• Planning phased purchasing ahead of October 2026
• Reviewing pack formats, pricing, and cashflow
• Aligning with suppliers who are preparing for duty-compliant packaging

This is about control, not speculation.

Why We’re Starting This Conversation Now

We are seeing the same pattern that occurs ahead of major excise changes in other regulated categories:

the businesses that wait until the final months pay the highest price — financially and operationally.

As the VPD deadline approaches, we expect:

• Increased demand for pre-duty stock
• Supply pressure in late 2026
• Reduced flexibility for late planners

Starting early gives you options. Waiting removes them.

Final Thoughts: Protecting Revenue Is a Choice

The Vaping Products Duty is coming. That part is fixed.

What isn’t fixed is:

• How prepared your business will be
• How much margin you retain
• How competitive your pricing remains

The difference between winners and losers in this transition will not be size or scale — it will be planning.

Start building your strategy now — your margin protection starts with early planning.

This is Episode 1 of our Countdown to VPD series. In the coming months, we’ll break down pricing strategy, packaging changes, stock planning, and how to stay competitive as the industry enters a new era.