Five weeks from today the Government will unveil its latest budget. There is every expectation that it will once again pull one of its favourite policy levers and raise excise on tobacco above inflation, based on the flawed belief that it will lead to a reduction in the number of overall smokers.
The Treasury has already given up claiming that the purpose of these continual rises in excise is to boost tax receipts, as tobacco tax revenue has been falling dramatically since the end of the pandemic, dropping by up to £1 billion each year.
What was once a steady, dependable source of annual tax revenue has been over-exploited so much that sales of legal cigarettes (falling by 42 per cent since the pandemic) and legal hand-rolling tobacco (declining by 48 per cent over the same period) are in freefall and being replaced by the much cheaper expanding illicit tobacco market.
By far the most significant consequence of the Government’s policy approach towards tobacco taxation is that it is probably the single biggest driver of the expansion of the illicit tobacco market in the UK – and it’s not hard to see why.
As of September 2025, the average recommended retail price (RRP) for a 20-pack of king size cigarettes is £16.60 and the average RRP of 50-grams of rolling tobacco is £40.09. This means that, with the exception of Australia and New Zealand, the UK has the most expensive tobacco prices anywhere in the world.
In stark contrast, according to TMA research conducted between June to August 2025 (canvassing the views of 6,000 UK smokers), the typical price of a 20-pack of illicit cigarettes obtained by those surveyed was between £3.00 - £6.00, while the typical price of 50g of illicit hand-rolling tobacco was between £5.00 - £8.00.
“Another year, another illicit tobacco survey, and what is most dispiriting is the fact that the Government is still burying its head in the sand and refusing to listen to the legitimate views and reservations of those UK citizens concerned about the impact of illicit tobacco and the impact that it has upon their lives and their local communities,” said Rupert Lewis, Director of the TMA.
There is a growing disconnect between the public’s tolerance to buy illicit tobacco the product – because it is so much cheaper than legal tobacco, and the negative impact that the wider illicit tobacco industry is having across the UK, with 63 per cent of those surveyed believing illicit tobacco has links to organised crime gangs (which also trade in drugs and people trafficking) and 69 per cent believing that cheap illicit tobacco is making it easier for children to take up smoking.
The Government’s approach to tobacco policy is deeply flawed. If it continues to rely entirely on exponential tax rises, the experiences of the "Tobacco Turf Wars" in Australia will explode onto Britain’s streets leaving law enforcement powerless to fight back.
If the Government is serious about reducing smoking rates it needs to execute a twin-track strategy of pursuing stronger "zero tolerance" enforcement action against those criminals trading illicit tobacco, along with prioritising more investment in targeted-education programmes, youth access prevention and smoking support services, and campaigns to educate smokers on less harmful alternative nicotine products.
