The Government will introduce a new tax on vapes in a bid to discourage non-smokers from taking up the habit.

During his Budget speech, Chancellor Jeremy Hunt told the Commons he was confirming “the introduction of an excise duty on vaping products from October 2026 and publishing a consultation on its design”.

However, he said that because vapes “play a positive role” in helping smokers quit, there will also be a one-off increase in tobacco duty to ensure vaping remains cheaper than smoking.

Currently, vaping products are subject to VAT at 20% but, unlike tobacco, they are not also subject to excise duty.

The Government has already published its plans to ban disposable vapes and will bring in new powers to restrict vape flavours and packaging.

It comes as Amanda Pritchard, NHS chief executive, welcomed Mr Hunt’s announcement of a £3.4 billion investment in NHS productivity through things such as expanding the use of artificial intelligence, cutting paperwork for medics and improving access to patients.

National Insurance contribution cut

Elsewhere in the Budget, the Chancellor announced another cut to National Insurance contributions.

He told MPs in his Budget that the rate of national insurance for workers earning between £12,570 and £50,270 would reduce from 10 per cent to 8 per cent.

The change could save the average worker £450 a year, adding up to £900 when combined with last year’s move.

Mr Hunt told MPs: “Because of the progress we’ve made because we are delivering on the Prime Minister’s economic priorities we can now help families with permanent cuts in taxation.

“We do this not just to give help where it is needed in challenging times. But because Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity.”

Experts have said that a 2p reduction in national insurance contributions would not by itself be enough to stop the tax burden reaching record levels by the end of this decade.

The Institute for Fiscal Studies said the measure would not prevent taxes rising to about 37% of GDP by 2028-29.

The Resolution Foundation think tank said the biggest net beneficiaries of the national insurance cut, combined with threshold freezes, are those earning £50,000, while those earning £19,000 or less will actually be worse off.