Cigarette smokers will pay more under a new tax system to come into effect in a couple of months, the Chancellor announced in today's Budget.

They already pay tobacco duty at a rate of 16.5% of the retail price plus a 'flat' element of £3.93 on a packet of 20. The flat £3.93 element was due to rise to £4.15 (an increase of 5.9%) at 6pm today.

This increase won't change, but from 20 May 2017, a minimum duty level called the 'minimum excise tax' will be introduced on cigarette packs – but not other forms of tobacco.

This will be set at £268.63 per 1,000 cigarettes. Based on a retail price of £7.35 for a pack of 20, the minimum duty will be £5.37.

So if the duty was due to be less, it will instead be raised to that level.

In many cases, this will see smokers who buy cheaper packs paying more, and the Government says the new system will add an average of 35p to a pack of 20 cigarettes.

As previously announced by the Government, duty on wine, beer, spirits and cider (which is charged at a flat rate per litre or hectolitre) will rise by 3.9% from Monday 13 March.

In practice this typically adds 2p to a pint of beer, 1p to a pint of cider, 10p to a bottle of wine and 36p to a bottle of Scotch whisky.

Martin Lewis
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