In this section: Every tax
Tobacco duty
Last updated . Figures refresh every night. How each figure is worked out.
A duty on tobacco products, charged as both a percentage of the retail price and a flat amount per thousand cigarettes, with a minimum floor. Manufacturers and importers pay it; it is in the price, so smokers bear it. It raised £7.6bn in 2025–26, which is 0.8% of everything HMRC collects and 0.25% of the economy. That is down £360m (4.5%) on the year before.
Figures for the 2025–26 financial year. Source: HM Revenue and Customs.
Key figures
- £7.6bnRaised in 2025–26 down on a year earlier: −£360m (−4.5%) vs 2024–25
- 0.25%Of the whole economy (GDP) down on a year earlier: −0.02 pts (−7.4%) vs 2024–25
- -46.1%In real terms, against the 2011–12 peak Adjusted for inflation with the GDP deflator
Sources: HM Revenue and Customs, HM Treasury.
What is the short version?
- How big: £7.6bn in 2025–26, 0.8% of everything HMRC collects; after inflation, 42% less than in 2015–16.
- Latest change, 2026: Vaping products begin to be taxed separately, closing the gap that had opened as smokers switched.
- Where it goes: Nowhere in particular, like almost every tax: it is not earmarked.
- The argument: Smoking imposes large costs on the NHS and on others through second-hand smoke; against that, it is steeply regressive: smoking is concentrated among lower-income households.
How much does it raise?
The numbers behind this chart
| Financial year | Cash | Real, 2025-26 prices |
|---|---|---|
2006–07Details for 2006–07 | £8,149m | £13,339m |
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2007–08Details for 2007–08 | £8,094m | £12,995m |
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2008–09Details for 2008–09 | £8,219m | £12,721m |
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2009–10Details for 2009–10 | £8,813m | £13,467m |
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2010–11Details for 2010–11 | £9,144m | £13,739m |
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2011–12Details for 2011–12 | £9,551m | £14,050m |
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2012–13Details for 2012–13 | £9,681m | £13,999m |
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2013–14Details for 2013–14 | £9,531m | £13,501m |
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2014–15Details for 2014–15 | £9,548m | £13,337m |
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2015–16Details for 2015–16 | £9,485m | £13,157m |
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2016–17Details for 2016–17 | £8,909m | £12,115m |
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2017–18Details for 2017–18 | £8,827m | £11,854m |
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2018–19Details for 2018–19 | £9,290m | £12,197m |
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2019–20Details for 2019–20 | £8,804m | £11,262m |
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2020–21Details for 2020–21 | £9,964m | £12,113m |
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2021–22Details for 2021–22 | £10,278m | £12,465m |
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2022–23Details for 2022–23 | £10,004m | £11,336m |
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2023–24Details for 2023–24 | £8,804m | £9,477m |
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2024–25Details for 2024–25 | £7,927m | £8,200m |
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2025–26Details for 2025–26 | £7,567m | £7,567m |
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Figures for the 2025–26 financial year. Source: HM Revenue and Customs, HM Treasury.
How "real terms" is worked out
Real terms use HM Treasury's GDP deflator, rebased to 2025-26 prices. That is the measure the Treasury and the OBR use for public finances; the consumer price index is the right one for a shopping basket, not for the size of the state.
How does it work?
Cigarettes carry two charges at once: a percentage of the retail price and a fixed amount per thousand sticks. A minimum excise duty then sets a floor, so cheap cigarettes cannot escape by being cheap. VAT is charged on top of all of it.
Tobacco is the most heavily taxed consumer product in the UK by a wide margin. Tax makes up the overwhelming majority of the price of a typical packet.
It is also the clearest UK example of a tax deliberately shrinking its own base, and succeeding. The rate per cigarette has risen relentlessly while the number of cigarettes taxed has collapsed.
How has it changed?
How it got here, and why each change was made:
- 1660Tobacco duty is introduced. It has been raised at almost every Budget since.
- 1993A tobacco duty escalator commits to real-terms rises every year, on health grounds rather than revenue grounds.
- 2002The escalator lapses, then returns in 2010 at 2% above inflation.
- 2017A minimum excise duty is introduced so that cheap brands cannot undercut the intended tax per cigarette.
- 2026Vaping products begin to be taxed separately, closing the gap that had opened as smokers switched.
Where does the money go?
Nowhere in particular. Tobacco duty is not earmarked. It goes into the Consolidated Fund and is spent on whatever the government of the day decides.
Because it is not earmarked, the only honest way to show what it pays for is by proportion. If tobacco duty receipts of £7.6bn were spent in the same proportions as all public spending in 2025-26, they would break down like this. It is an illustration of scale, not a statement about where those particular pounds went.
See for every £100 of tax for the full picture.
Does it change what people do?
This is the case study the site keeps returning to. Duty per cigarette has risen sharply for thirty years; the number of cigarettes on which duty is paid has fallen by roughly three quarters from its peak, and real receipts peaked over a decade ago. Falling smoking rates, vaping and the illicit market all shrink the taxed base, and only the first is the outcome the policy wanted.
When a tax rise stops raising money looks at the cases where the effect has been large enough to move the revenue.
How does that compare with other countries?
In 2024 the UK raised 1.6% of GDP this way: seventh of the 12 countries compared here.
What is being compared
The OECD heading is all excise duties together: alcohol, tobacco and fuel.
Countries are those this site compares throughout, not the whole OECD, and a country appears only where it reports this heading for 2024.
What are the arguments?
The case for high tobacco duty
- Smoking imposes large costs on the NHS and on others through second-hand smoke.
- Price is one of the most effective levers for cutting smoking, especially among young people.
- Even with falling volumes it still raises billions.
- Reducing smoking is the stated aim, so falling receipts are success, not failure.
The case against
- It is steeply regressive: smoking is concentrated among lower-income households.
- High duty sustains a large illicit market that pays nothing and is harder to regulate.
- Revenue is now falling in real terms, so it is a shrinking base to rely on.
- Those who continue to smoke are, increasingly, those least able to afford it.
Both columns are set out as their strongest case, not as a preferred answer and a strawman. See how this site handles contested questions.
Common questions
- How much tax is on a packet of cigarettes?
- A duty on tobacco products, charged as both a percentage of the retail price and a flat amount per thousand cigarettes, with a minimum floor. Manufacturers and importers pay it; it is in the price, so smokers bear it.
- How much does tobacco duty raise?
- £7.6bn in 2025–26, which is 0.8% of everything HMRC collects.
- Where does tobacco duty go?
- Nowhere in particular. Tobacco duty is not earmarked. It goes into the Consolidated Fund and is spent on whatever the government of the day decides.
Use this data
The figures belong to the bodies that published them and are used under their terms, listed in Sources for this page; most are Crown copyright under the Open Government Licence. Only our own words, analysis, charts and derived calculations are ours, published under CC BY 4.0: reuse them, including commercially, if you credit Tekstak Ltd and link back to this page.
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- Tobacco duty receipts by financial year (CSV) JSON HM Revenue and Customs: Open Government Licence v3.0
- Total HMRC receipts by financial year (CSV) JSON HM Revenue and Customs: Open Government Licence v3.0
- All data, field definitions and licences
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Sources for this page
| Source | Publisher | Figures as of | Updated | Licence |
|---|---|---|---|---|
| HMRC tax receipts and National Insurance contributions for the UK | HM Revenue and Customs | the 2025–26 financial year | annual | Open Government Licence v3.0 |
| GDP deflators at market prices, and money GDP | HM Treasury | the 2025–26 financial year | annual | Open Government Licence v3.0 |
| Revenue Statistics: comparative tables | OECD | 1 January 2024 | annual | CC BY 4.0 (OECD) |
Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations are ours, under CC BY 4.0.