HMRC Vaping Duty Stamps Scheme

Description

At Autumn Budget 2024, the Government confirmed Vaping Products Duty (VPD) would be introduced from 1 October 2026. Following further technical consultation, the Government announced a Vaping Duty Stamps Scheme (VDS) to be implemented alongside the VPD. The response to the consultation is available on GOV.UK. HM Revenue & Customs (HMRC) will conduct a competitive flexible procurement exercise to appoint a Vaping Duty Stamp supplier via a concession contract. The duration of the contract will be 5 years with an optional one (1) year extension period at the sole discretion of the Authority. The estimated total contract value (inclusive of any options) is £32 million (excluding VAT). This value has been calculated based on the indicative volumes provided within the Specification and using existing information on stamp duty costs, including engagement with International Tax Stamp Association (ITSA). The Authority anticipates that a third of the contract value is associated with delivery charges, which are a non-profitable element of the contract. This assumption is based on average delivery costs of UK postal providers, for National, European and International mail. The Supplier will support the implementation of the Vaping Duty Stamp (VDS) Scheme. Under the scheme, businesses will purchase duty stamps directly from the appointed Supplier. The stamp will be a physical product incorporating digital features for traceability and authentication and will also capture data; including information about the manufacturer or business who affixes the stamp, product details and product journey through the supply chain. The scheme will be managed by the appointed Supplier, who will be responsible for production and supply, as well as providing the system for businesses to order, make payment, manage their stamps and collect data for HMRC relating to vaping products and the journey through the supply chain. The stamp must be applied before the product is released for consumption, and associated data will be recorded in the Supplier's system. Businesses must register with HMRC to participate in the VDS scheme. Registration opens on 1 April 2026, and once approved, businesses will be eligible to purchase duty stamps from the appointed Supplier.