After chancellor announced tax on vaping products during budget, department claims that it ‘will look to mandate digital channels’ for delivery of new regime, as it will help promote compliance

HM Revenue and Customs claims that the use of mandatory digital channels for delivery of the new tax regime for vaping products will help “reduce the risk of fraud and error”.

In the recent spring budget, chancellor Jeremy Hunt announced that vapes will become subject to the kind of excise duties imposed on tobacco and alcohol products. Currently, vaping products are only subject to the standard VAT rate of 20%, and not excise rates.

In consultation documents on its plans to deliver the new tax regime, the department said that “HMRC operates on a ‘digital-by-default’ basis and will look to mandate digital channels by which all businesses within the scope of the duty must register, report and pay online, with exceptions only for those who are digitally excluded by virtue of protected characteristics”.

According to the tax agency, the compulsory use of online channels will help to ensure compliance and minimise mistakes and fraudulent activity.

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“HMRC will reduce the risk of fraud and error by using digital channels where possible, using what is known about businesses to identify risks as they arise, and giving customers the opportunity to correct mistakes before they reach HMRC,” the consultation guidelines added.

The document revealed that, once the new tax comes into effect in October 2026, it will mean that “UK manufacturers who are liable for the duty will have to register with HMRC, report information regarding the goods they have produced, and pay their liability via monthly returns”.

“HMRC will provide support and clear guidance for businesses ahead of implementation,” the consultation added. “The digital service for registering will also be available in good time to allow business to prepare for the introduction of the duty. We expect the registration requirements to be broadly similar to existing excise regimes.”

The consultation on the department’s plans is open until 29 May. Submissions can be made by emailing vapingproductsduty@hmrc.gov.uk .