The government has announced that duty rates on all tobacco products will increase by RPI + 2% until the end of this Parliament. The rate on hand-rolling tobacco will increase by RPI + 6% this year (and at RPI + 2% thereafter).
Additionally, the government has announced that increased resources will be allocated for HMRC and Trading Standards to combat the illicit tobacco trade, and the government proposes to consult on implementing stronger penalties for tobacco duty evasion.
Anyone manufacturing, importing, distributing, retailing or consuming tobacco products.
The increase in duty has already been applied, having come into effect at 18:00 on 11 March 2020.
Subsequent increases will, at the latest, come into effect on 6 April in each respective year from 2021 onwards.
It is not known when the additional resources for HMRC and Trading Standards will be made available, or when the consultation on evasion penalties will begin.
Tobacco duties are often increased in the Budget, so the implemented increases are little surprise.
The additional resources for HMRC and Trading Standards, coupled with the consultation on increasing evasion penalties, indicates that the government is concerned that increased prices as a result of duty increases may lead to smokers and/or businesses turning towards illicitly-sourced (e.g. smuggled or counterfeit) tobacco.