Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will make an assessment of the impact of the current tobacco excise duty regime on the levels of illegal tobacco consumption.

Strong enforcement is essential in tackling the illicit tobacco market. HM Revenue and Customs and Border Force have had illicit tobacco strategies in place since 2000. Our latest strategy, “Stubbing out the problem”, was published in January 2024. The Department continues to investigate how the illicit tobacco market is evolving, including through its compliance activity, and the extent to which that may affect overall tax receipts seen.

The illicit tobacco market is dominated by organised crime groups that make money by smuggling and selling illicit tobacco products in the UK. Our latest estimate is that illicit tobacco costs the UK £1.8bn in lost revenue per year. HMRC recently published an updated version of their Measuring Tax Gaps publication which now includes tax gap estimates up to 2023/24. The illicit market volume for cigarettes is shown in Table 3.13 and the total consumption volume is shown in Table 3.12. The illicit market for hand rolling tobacco is shown in Table 3.17 and the total consumption volume is shown in Table 3.16.

Whilst tobacco duty has been progressively increased over time, successive illicit tobacco strategies have proven effective in tackling the size of the illicit tobacco market, reducing the tobacco duty tax gap from 21.7% in 2005/6 to 13.8% in 2023/24.

Tobacco duty raised almost £8 billion in 2024/25. High duty rates, making tobacco less affordable, have helped reduce smoking prevalence. ‘Cancer in the UK: Overview 2025’ published by Cancer Research cites an Office for National Statistics Adult Smoking Habits publication which shows that the percentage of adult smokers in the UK decreased from 20.2% in 2011 to 11.9% in 2023. The ONS smoking prevalence data shows the percentage of adults in the UK who smoke cigarettes but does not give any indication of how much or how often these adults smoke.