The UK’s Illicit Cigarette Trade

In the June 2025 issue of Tax Stamp & Traceability News™, we reported that KPMG had released its ‘Illicit Cigarette Consumption in Europe’ report for 2024, commissioned by Philip Morris International. Prompted by a later in-depth report by the British Broadcasting Corporation (BBC) on the illicit cigarette trade in Hull, a port city on England’s North Sea coast, this article examines the situation in the UK as a whole.

While each country has its particularities in terms of illicit cigarette activity, all countries – certainly in Western Europe – are broadly similar, so this article can serve as a paradigm study. That said, the rate of tax on tobacco products in the UK is ‘one of the highest tobacco taxation regimes in the world’, according to UK parliament member Gareth Davies.

This high tax rate serves as the starting point for illicit trade in the UK. The price of fully tax-paid cigarettes ranges between £15-£18 per pack, for standard, non-luxury brands, of which tobacco duty is £6.33+16.5% of the pack price, and 20% is VAT – ie. a total tax of around £12. Meanwhile, illicit packs retail at £3-£4.