Government figures released this week show illegal tobacco cost the UK £1.7BN in lost tax revenue just last year.
And the hidden costs are even higher.
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The latest tax gaps data released by HMRC this week paint a concerning picture. Illegal tobacco cost the UK £1.7BN in 2024/2025.[1]
Rogue traders and serious organised criminals are profiting from selling illegal tobacco on British high streets, using the proceeds to fund more sinister crimes such as weapons and drug smuggling and even human trafficking.[2]
Honest retailers are being forced to shut down as they can no longer compete with the criminals’ pricing [3]. JTI’s cheapest cigarette brand on the market costs around £13.60 [4], most of which is tax paid to HMRC, whereas a pack of illegal cigarettes costs as little as £5 [5].
Communities are feeling the burden, with money that could be invested into regenerating high streets and local areas diverted to organised crime instead.
75% of those surveyed nationally find increased crime and violence associated with illegal tobacco in local communities very concerning. This is up from 63% in 2025.[6]
That cheap pack of cigarettes, it costs more than you think.
The Government recently announced £30m of funding for a new High Street Organised Crime Unit [7]. The new funding aims to boost police and Trading Standards’ response to organised crime, but more can still be done.
Home Secretary Shabana Mahmood has also announced proposals to toughen enforcement by doubling the maximum closure period for illicit retailers, as part of efforts to tackle organised crime on British high streets [8].
Under current rules in England and Wales, premises can be closed for three months, with an option to extend the closure to six months [9]. The government’s proposals, expected to become law by the end of 2026 after consultation, would double the maximum closure period to 12 months.
JTI is calling on the Government to treat illegal tobacco as a serious economic and social issue with 3 simple asks:
Cancel the double taxation on tobacco.
Introduce a licensing scheme.
Increase penalties to fund enforcement.
1. Cancel the double taxation on tobacco
The double tax increase on tobacco products starting on 1 October will widen the price gap between legal and illegal products, further driving consumers towards illegal tobacco. This will likely lead to more lost tax revenue, more legitimate businesses closing down and more organised crime activities.
80% of people surveyed nationally believe increasing taxes will increase demand for illegal tobacco [6]
2. Introduce a licensing scheme
Implement a national licensing scheme for tobacco and nicotine products. With tough penalties of up to £10,000 for selling without one, and for selling illegal products, it would make it far harder for criminals to operate openly on UK high streets. Ringfencing those penalties to reinvest in Trading Standards resources would self-fund much needed further enforcement.
Almost one third of those surveyed have been offered illegal tobacco products [6]
3. Increase penalties to fund enforcement
We welcome government plans to allow authorities to close shops for up to a year where they are found to be involved in illegal activity. However, more is needed -
JTI calls on the Government to attach fines of up to £10,000 to closure orders, that must be paid before the order is lifted. Ringfencing those fines to reinvest in Trading Standards resources would self-fund further enforcement.
82% of those surveyed say there is not enough enforcement to stop illegal tobacco [6]
The impact on communities
Illegal tobacco can affect communities in multiple ways.
-It can increase criminal activity
Enforcement agencies link the trade to organised criminal networks.2
It can harm legitimate retailers
Businesses operating within the law may struggle to compete with illegal prices.
It can weaken local economies
Money spent on illegal goods damages the legal economy.
“Rising costs are damaging our business as well as the reduced profits from illegal tobacco sales [elsewhere]. The sales that we [would] normally get from add-ons reduces our profits massively. We have to consider how many staff we can afford to pay now and really we want to be paying them a higher wage than we do. We need the government to tackle this problem head on and deal with it.”
Retailer, Liverpool
Click here to find out more about the impact illegal tobacco has on communities including how you can spot it, anonymously report it and help shut it down.
IT'S TIME TO SHUT IT DOWN.
Seen something suspicious?
You don't need to confront anyone.
You can report it anonymously, quickly and safely.
If you're aware of anybody selling illegal tobacco you should report this using the anonymous form above, or by contacting HM Revenue & Customs' Fraud Hotline on 0800 788 887, Trading Standards (through the Citizens Advice consumer helpline) on 0808 223 1133 or Crimestoppers on 0800 555 111.
Share your concerns and demand action from your local MP.
Find out who to contact here.
Download our template letter and call on the government to treat illegal tobacco as the serious issue it is.
We're calling on the Government to treat illegal tobacco as a serious economic and social issue.
Here's how you can help:
- Support tougher enforcement against repeat offenders
- Back higher penalties for offenders and more funding for Trading Standards
- Push for better cross-border controls on smuggling
- Challenge government inaction and advocate for constituency-specific crackdowns
MPs: Illegal tobacco is undermining the UK economy and your local area. Let's work together to stop it. It's time to shut it down.
Book a session to discuss the economic impact in your constituency.
We can all play a part in helping to stop the illegal tobacco trade and the negative impact it has on communities.
[1] £1.7bn figure based on HMRC's tax gap estimates for Excise Duty and VAT losses 2024 - 2025. Measuring_tax_gap_online_tables_2026.xlsx (select the table for 2026 and go to table 3.4 See lines 8 and 9 combined for 2024-2025).
[2] HM Revenue & Customs & Border Force. (2024, January 29). Stubbing out the problem: A new strategy to tackle illicit tobacco. GOV.UK. Updated March 1, 2024.
[3] Hidden-in-plain-sight-tackling-crime-on-the-uks-high-streets.pdf
[4] Recommended retail price correct as at 15 June 2026. Retailers are free to price as they choose.
[5] Test purchasing was conducted by a trained undercover operative commissioned by JTI UK.
[6] This data is based on an online survey that was conducted for JTI by an independent British Polling Council accredited research agency between January 7 and January 29 2026, involving a sample of 15,228 UK adults aged 19 and over. To ensure the findings are representative of the UK general population, the data was weighted by age, gender and region.
[7] New high street unit set up in nationwide blitz on dodgy shops - GOV.UK
[8] New laws to shutdown dodgy high street shops in crime crackdown - GOV.UK
[9] https://www.legislation.gov.uk/ukpga/2014/12/part/4/chapter/3