Cigarette prices likely to rise from Wednesday night due to the Budget

Cigarette prices look likely to rise this Wednesday as Rishi Sunak mulls a tobacco duty hike in his Budget.

The Chancellor committed last year to raise tobacco duty by Retail Prices Index inflation plus 2% every year until 2024.

RPI rose 1.4% in January, suggesting duty could rise by more than 3% unless the top Tory changes his mind before Budget Day.

Changes usually take effect at 6pm on Budget Day itself – with the most recent adding around 22p to a pack of 20 cigarettes.

Duty on hand-rolling tobacco rose by a much higher 6% last year.

Cigarette duty has risen consistently in recent years
Cigarette duty has risen consistently in recent years

The government has previously pledged to keep raising so-called ‘sin taxes’ on cigarettes to put people off taking up the habit.

A statement last year said: “The government is committed to maintaining high tobacco duty rates as this is an established tool to reduce smoking prevalence and to ensure that tobacco duties continue to contribute to government revenues.”

But beer and fuel duty are both tipped to be frozen in Wednesday’s Budget as Britain emerges from the Covid pandemic.

Reports claim the Chancellor will hold the rates as they are – and will instead plot a “stealth” tax raid on workers by freezing income tax allowances for three years.

Brits could also pay in other ways as Mr Sunak makes clear he must account for the £280bn cost of dealing with the pandemic.

Beer duty has been frozen or cut each year since 2013 while a freeze on fuel duty this year would be the 11th in a row. Other alcohol duties have risen in that time.

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Last year raising beer duty – currently around 54p a pint – with inflation would have only added 1p to the cost of a pint in the pub.

But it would have helped the Treasury bring in an extra £300million or so per year into the future.

None of the tax changes will be confirmed until Wednesday lunchtime so they are not confirmed at this stage.


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