UK tobacco market summary

Expenditure & revenue

• Consumer spending on tobacco products in 2012 amounted to an estimated £15.1 billion, around 85% of this on cigarettes.
• Tax revenue from tobacco in 2012/13 amounted to £12.3 billion – £9.7 billion in excise duty plus £2.6 billion in VAT.
• The total tax burden (excise duty plus VAT) accounts for 88% of the price of the cheapest cigarettes on sale in the UK.

Smuggling & crossborder shopping

• Owing to the high level of tobacco taxation the UK experiences a high level of smuggling and crossborder shopping in tobacco products – referred to as non-UK duty paid (NUKDP) consumption. HM Revenue & Customs estimate that in 2012/13 up to 16% of cigarette and 48% of handrolling tobacco consumption was NUKDP.
• We believe that the majority of NUKDP consumption comes from other EU Member States where taxes, and therefore prices, in many countries are much lower. For example, a typical pack of 20 premium cigarettes costs £7.98 in the UK and around £3.80 in Spain.
• The empty pack surveys (EPS) conducted on behalf of the tobacco industry indicate that the non-UK duty paid cigarette market in 2012 was around 21%, up from around 17% in 2011, which represents an additional revenue loss to the Treasury of hundreds of millions of pounds.
• As a result of recent VAT increases and the re-introduction of the duty escalator cigarette taxation has increased by 37% since 1 January 2010.
• There is widespread concern that these tax increases will lead to an increase in illicit tobacco consumption.
• HM Revenue & Customs estimate that in 2012/13 NUKDP consumption lost them revenue of between £1.8 and £3.4 billion.

Smoking prevalence

• The latest figures (2011) from the Government’s General Lifestyle Survey show that 20% of the adult population (16+) in Great Britain were cigarette/handrolling tobacco smokers – although the report does note that this is likely to be an understatement. This equates to around 10.5 million smokers – 8.8 million in England. Northern Ireland’s Continuous Household Survey shows that 23% of adults (16+) were cigarette/handrolling tobacco smokers – around 340,000 people.

Employment

• TMA member companies directly employ over 5700 people in the UK.

A 2012 study by Cogent estimated a further 66,000 jobs among suppliers and in wholesale, distribution and retailing were dependent on the UK tobacco industry.