Legitimate vape shops helping people quit smoking fear being run out of business after Chancellor John Healey vowed to take away their business rates relief in a crackdown on 'dodgy' high street businesses.

Mr Healey announced in his inaugural Budget that vape shops would be banned from claiming small business rates relief and the discounted rate offered to retailers from April next year. Treasury figures suggest this will bring in £10million annually.

But it has sparked fears in the vaping sector that established businesses that help smokers to give up - often in partnership with local NHS schemes - are being tarred with the same brush as the 'dodgy' shops Andy Burnham has vowed to shut down.

An industry source said: 'There is a worry specialised retailers are going to lose all their relief, which will put some out of business, while convenience stores under the threshold will keep their tax cut.'

The announcement comes hot on the heels of an inflation-busting hike in tobacco duty and the introduction of a levy on vape products that took effect on October 1. 

Mr Healey elected to spare smokers and vapers from any further hikes for at least another year that could cost heavy vapers an additional £600 in tax alone each year.

Vape businesses are understood to be urgently seeking clarification from the Government on exactly what it considers to be a 'vape shop' - and whether non-specialist shops that sell vapes, such as supermarkets, will be affected.

Gillian Golden, chief executive of the Independent British Vape Trade Association representing retailers, said 'responsible businesses' faced being lumped in with 'rogue high street traders' in the eyes of the law.

Do YOU run a vape shop? Will this affect you? Email: jon.brady@dailymail.co.uk 

'It is difficult to see how growth in every postcode can be achieved by inflicting yet another financial blow on responsible businesses that help the UK’s 4.9 million adult smokers find cheaper, less harmful products,' she said. 

'Responsible businesses now compete against the illicit trade and have been dismayed that Ministers might regard helping adults quit smoking as not making a positive contribution to local communities. 

'Given the comparative harms of smoking, alcohol and gambling, the legitimate vape sector is not being treated fairly.'

John Dunne, Director General of the UK Vaping Industry Association (UKVIA), this afternoon accused Mr Healey of creating a 'deeply unfair two-tier market' while continuing to flounder on what a 'vape shop' is by law.

He told the Daily Mail: 'Today's Budget risks creating a deeply unfair, two-tier vaping retail market in which responsible specialist vape shops face substantial new business rates bills while neighbouring convenience stores selling exactly the same products could pay no rates at all.

'How can it be fair for one independent retailer to face a substantial new bill while the shop next door selling the same vaping products may continue to benefit from relief?

'While we welcome the absence of further vaping duty increases, the Government should be supporting responsible retailers and cracking down on illegal operators, not making life harder for businesses that help smokers quit.'

Hazel Cheeseman, chief executive of anti-smoking charity Action on Smoking and Health (Ash), warned that getting the relief wrong could hurt legitimate vape retailers helping people to stop smoking tobacco.

'It will take careful policy making to ensure that this business rates review actually captures the type of shops that the public have concerns about, including those linked to criminal activity,' she said.

'The Government must ensure this policy tackles genuine problems on our high streets without reinforcing the dangerous misconception that vaping is as harmful as smoking.'

Earlier this year, the Prime Minister vowed to crack down on 'dodgy' vape shops that had 'hollowed out' Britain's high streets, with plans for a licensing scheme and tighter planning controls to stop criminal gangs from operating with impunity.

Last month, the Daily Mail watched as police officers raided an illicit shop where they found £1,000 of counterfeit tobacco ready for sale. But nine in 10 of these shops remain open for business selling illegal tobacco and vapes, often to children.

The Treasury was contacted for comment.

Vapers and smokers' wallets were dealt a hefty blow at the start of the month as new levies were applied to vaping products while tobacco was given an inflation-busting duty hike.

Prices of some types of vape liquid doubled overnight as the Vaping Products Levy - charged at £2.20 per 10ml of liquid, even on zero-nicotine formulas - took effect, with cheaper products popular with lower-income vapers hit the most.

A heavy daily vape user getting through 270 10ml bottles a year could expect to pay an extra £600 a year. HMRC has given retailers a six month grace period to sell old stock. 

But cigarette smokers and other tobacco users were also hit with the same £2.20 flat hike - on top of a duty hike two percentage points above the rate of inflation.

Then-Chancellor Rachel Reeves said at the time this was to stop traditional smoking from becoming cheaper than vaping, while the Vaping Products Duty discouraged young people from taking up vaping in the first place. 

But the vaping duty was slammed as a 'tax on public health' by Mr Dunne of the UKVIA, who claimed it pushed the price of vape liquid up as much as 264 per cent after VAT.

Tobacco duty was hiked at the rate of inflation as dictated by the retail price index plus a further two percentage points on October 1 - with an additional one-off £2.20 on top per 100 cigarettes or 50g of tobacco products.

Treasury figures suggest this pushed the price of a pack of 20 cigarettes up by £1.21, hiked the cost of a typical 30g packet of rolling tobacco by £2.54, and added 81p to every 10g of cigars and £1.95 to a 30g packet of pipe tobacco.

Duty on heating tobacco - sold under brand names such as IQOS and Ploom - has risen by almost a quarter since October 2024, and as of October 1 saw smokers of such devices paying an additional 45p per 6g pack.

Manufacturers and importers pay the duty to HMRC - though some or all of the cost may be passed on to smokers and vapers at the till.

Shane Margereson, owner of online vape shop Ecigone, previously told the Daily Mail's sister title This is Money: 'For vapers it won't all land on October 1.

'Shops can keep selling stock bought before October at pre-duty prices until the end of March 2027, so prices will step up gradually over the winter rather than jumping overnight, and the popular flavours will sell through first.

'The industry will take the hit and adjust, because it always has.' 

From April 1, all vape products must carry an HMRC stamp to show they are legitimate - in a bid to combat the trade in illicit vapes. 

Treasury figures suggest the £2.20 flat tax alone will bring in £130million each year between 2027 and 2030.

Labour has waged near-constant war on smokers and vapers since coming to power, banning disposable vapes in June last year in what ministers said was a move to discourage young people from taking up the habit.

Critics say the ban has only encouraged a black market trade in disposable vapes, while recycling group Material Focus says millions of 'reusable' vapes continue to be thrown away every month.

Ministers are also consulting on whether vaping firms should be banned from using brightly coloured packaging and 'attractive' marketing.

And from tomorrow retailers will be banned from selling nicotine pouches, zero-nicotine vape liquids and even vape parts such as coils to anyone under the age of 18.

Previously, the products could be sold to children via a loophole in legislation as they did not contain tobacco, and were not covered by laws governing other nicotine products. 

Lawmakers are also plugging a gap that allowed adults to buy vapes for under-18s - making it an offence much the same as buying cigarettes and alcohol for children.

The de facto lifetime ban on cigarettes for anyone born on or after January 1 2009 that was first mooted by the Conservatives also remains on the cards.

From New Year's Day 2027, anyone aged 18 will no longer be able to legally buy cigarettes, with the minimum age increasing by one with each passing year. 

Elsewhere in the Budget, the Chancellor offered 20million households a £100 handout for energy bills this winter - while hitting the banks with an additional three per cent corporation tax surcharge in order to fund a £5.5bn benefit boom.

Mr Healey pledged 'breathing space' for hard-pressed families as he unveiled plans to lower fiscal headroom to £15bn by 2029-30, down from £23.6bn, and reduce borrowing over the next five years.

He also confirmed a plan to abolish standing charges on gas bills that had been trailed earlier on Wednesday morning and an extension to the zero per cent VAT rate on electricity bills to July alongside the £100 energy payment.

However, many of these discounts are expected to be swallowed up by a projected 27 per cent increase in the energy cap in the New Year.

The fiscal watchdog, the Office for Budget Responsibility, has forecast a slowdown in growth for the British economy, predicting expansion of 1.2 per cent this year but only 1 per cent the next.

Other announcements in Mr Healey's 'steady as she goes' Budget, including tariff reductions on imported products such as marmalade and gherkins, were derided as an 'insult to families' that would see just 40p slashed from the average weekly shop.

Addressing the Commons immediately after Mr Healey, Leader of the Opposition Kemi Badenoch told the Chancellor his Budget was 'not good enough, not strong enough, not bold enough'.

She said: 'Is that it? Really? 

'The prime minister came in promising to reverse 40 years of neoliberalism. Instead, we got 4p off gherkins.

'This Budget does not come close to meeting the moment.'

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