The UK Vaping Industry Association (UKVIA) has warned that the Government risks creating a two-tier vaping retail landscape following today's Budget announcement that vape shops in England will be stripped of key business rates reliefs from April 2027.
The trade association says the decision could leave independent specialist vape retailers facing substantial new financial pressures while neighbouring convenience stores, newsagents and other general retailers selling the same products could continue to qualify for relief, potentially paying no business rates at all.
The UKVIA has also raised serious concerns that the Government has failed to provide a clear definition of what constitutes a vape shop, leaving considerable uncertainty over which businesses will be affected.
The Budget confirmed that vape shops in England will lose eligibility for both Small Business Rates Relief (SBRR) and the reduced Retail, Hospitality and Leisure (RHL) business rates multipliers from April 2027.
This comes as the Government is increasing the threshold for 100% Small Business Rates Relief from £12,000 to £18,000 for qualifying retail, hospitality and leisure premises, taking an estimated 70,000 additional high street businesses out of paying business rates altogether.
John Dunne, Director General of the UKVIA, said: “The Government risks creating a deeply unfair, two-tier vaping retail market in which responsible specialist retailers are financially penalised while other businesses selling exactly the same products continue to benefit from business rates relief.
“This means a specialist vape retailer now faces a substantial new business rates bill while the convenience store next door, selling exactly the same vaping products, could pay no rates at all.
“How that can possibly be considered fair or proportionate and how it supports the Government's ambition to create a smoke-free country are beyond me.
“To make matters worse, the Government has still not provided a clear definition of what constitutes a vape shop for the purposes of these changes.
“Without clear and consistent criteria, there is a very real risk that responsible specialist retailers will be placed at a significant competitive disadvantage compared with other businesses selling the same products.
“The Government needs to explain urgently how it intends to distinguish between these retailers and justify why they should be treated differently.”
The announcement represents a further financial setback for the vaping industry, coming just four weeks after the introduction of Vaping Products Duty at £2.20 per 10ml on 1 October.
John continued: “Today's announcement represents another damaging blow to legitimate vape retailers who are already dealing with rising operating costs and an increasingly challenging regulatory environment.
“For some smaller independent vape shops, losing Small Business Rates Relief combined with the impact of vaping duty, could threaten the viability of businesses that provide local jobs, support high streets and help adult smokers move away from cigarettes.
“What makes this decision even harder to understand is its relatively modest benefit to the public finances.
“According to the Treasury's own figures, removing business rates reliefs from vape shops and adult gaming centres combined is expected to raise just £10 million a year.
“We seriously question whether this relatively small financial gain is proportionate to the potential damage to legitimate businesses, local jobs and the Government's own public health objectives.”
The UKVIA has consistently called for tougher action against rogue retailers, illegal vaping products and underage sales, including the introduction of a comprehensive retail licensing scheme, stronger enforcement and substantial penalties for businesses breaking the law.
John added: “We fully support action against irresponsible retailers and the illicit vaping market. However, there is a fundamental difference between cracking down on businesses that break the law and imposing additional financial burdens on legitimate businesses that operate responsibly. The Government should recognise and support that contribution rather than introduce measures that could undermine it.
“We are also concerned that the cumulative impact of increased taxation and rising costs could make legal vaping products less affordable and legitimate retailers less viable, potentially pushing more consumers towards the illicit market.
“The UKVIA is calling on the Treasury to urgently clarify the definition of a vape shop, explain how the new rules will apply to different types of retailers and engage with the industry before the changes take effect in April 2027."
Meanwhile, Independent British Vape Trade Association has also criticised the government for not supporting the country's smoke-free ambitions by penalising the very businesses helping smokers to quit.
Gillian Golden, Chief Executive of the Independent British Vape Trade Association said, “If the Government is serious about supporting our high streets and achieving its smoke-free ambitions, it needs policies that are fair, consistent and proportionate, rather than measures that risk penalising the very businesses helping smokers to quit.
“To support a 20% cut to business rates bills for clubs, pubs and live music venues, vape shops will be excluded from business rate reliefs. It is difficult to see how growth in every postcode can be achieved by inflicting yet another financial blow on responsible businesses that help the UK’s 4.9 million adult smokers find cheaper, less harmful products.
"Rogue high-street traders have blighted the legitimate sector. Responsible businesses now compete against the illicit trade alongside even higher business costs, excise duty, a proposed licensing scheme, and restrictions on products and in-store displays. Media and political debate has consistently failed to distinguish legitimate specialist vape shops from criminal fronts that happen to sell vapes alongside illicit tobacco and other illicit goods, often to children.
"Responsible dedicated vape businesses across the country have been dismayed that Ministers might regard helping adults quit smoking as not making a positive contribution to local communities. This is especially troubling for businesses involved in NHS and local authority stop-smoking projects, and given the differing harms of vaping and alcohol."