The United Kingdom Case Study

The UK has seen a sharp decline in domestically taxed tobacco. At the same time, the market share of non-domestic factory-made cigarettes (FMC), including legal cross-border and illicit products, has grown from 13% in 2011 to 38% in 2024. This increase has coincided with regular tax hikes under the tobacco tax escalator, making the UK one of the most expensive tobacco markets in Europe. Fine-cut tobacco (FCT) tax increases have reduced the price gap with FMC, weakening the incentive for consumers to switch to domestic FCT. As a result, non-domestic consumption has increased, leading to a decline in foregone tax revenue and a reduction in the government’s ability to regulate tobacco use and protect public health.