The global vaping industry is currently facing a “perfect storm” of legislative and fiscal changes. While much of the headlines have focused on the UK’s own upcoming Vaping Products Duty in October 2026, a massive shift is happening right now in the world’s manufacturing hub that will arguably have a more immediate impact on your bottom line.
On April 1st, 2026, China will officially cancel its long-standing 13% VAT export rebate for e-cigarettes (HS Code 2404120000). For over a decade, this rebate acted as a hidden subsidy, allowing Chinese factories to undercut global competition.
With this “safety net” removed, the era of ultra-cheap imports is coming to a grinding halt. Here’s why this matters for your brand and why moving your manufacturing to the UK—and specifically to Xyfil—is the smartest move you can make this year.
The Death of the “China Discount”
For years, the 13% rebate allowed Chinese manufacturers to keep their export prices artificially low. Since China’s Ministry of Finance announced the cancellation, the math for UK brands has changed overnight.
- Immediate Cost Increases: Most Chinese factories operate on margins much thinner than 13%. They simply cannot absorb this tax hike.
- The Trickle-Down Effect: A 10–15% increase at the factory level translates to much higher shelf prices once shipping, duty, and retail margins are added.
- Supply Chain Volatility: We expect a massive “front-loading” of orders in Q1 2026 as brands try to beat the April deadline, likely leading to shipping delays and stockouts.
Why “Made in Britain” is the Stable Choice
While imported brands are navigating international tax drama, British-made e-liquids offer a “safe haven” of stability. By manufacturing locally with a partner like Xyfil, you bypass the chaos of Chinese fiscal policy entirely.
Price Stability & Transparency
UK-based manufacturing is not affected by Chinese VAT changes. When you work with us, your cost of goods remains predictable. You aren’t at the mercy of a foreign government’s tax notices or fluctuating exchange rates.
The “Vape Miles” Advantage
Beyond the environmental benefits of reducing your carbon footprint, local manufacturing means:
- Faster Turnaround: Why wait 6–8 weeks for a container from Shenzhen when you can have fresh stock delivered in days?
- Lower Logistics Costs: No more rising ocean freight costs or port congestion fees.
Unmatched Quality Standards
British manufacturing follows the world’s strictest TPD and MHRA guidelines. At Xyfil, we use pharmaceutical-grade ingredients and maintain 100% batch traceability. When you buy British, you aren’t just buying local; you’re buying a level of purity and safety that unregulated imports often struggle to match.
Future-Proofing for the UK Vape Duty
The Chinese tax hike is just the first hurdle. On October 1st, 2026, the UK Vaping Products Duty kicks in at £2.20 per 10ml.
Importing products under this new regime will be a logistical nightmare. Every bottle must carry a Vaping Duty Stamp, and importers will face intense administrative burdens to prove their tax compliance.
Xyfil makes this easy. As a UK-based manufacturer, we are already integrating the HMRC Duty Stamps Scheme into our production lines. We handle the compliance, the stamping, and the paperwork, so your brand hits the shelves fully legal and ready to sell.
How Xyfil Can Help You Pivot
At Xyfil, we specialise in helping brands “bring it home.” Whether you’re looking to move an existing flavour profile or launch a new compliant range, our facility is built for your growth.
- ISO 7 Cleanrooms & GMP Standards: Our ISO-certified facility ensures every drop is produced in a sterile, high-tech environment.
- Massive Capacity: We manufacture up to 2.5 million bottles per month, giving you the scale you need to replace your imported stock.
- Award-Winning R&D: Our lab team can help you replicate your best-selling imported flavours with higher-quality, UK-sourced ingredients.
Conclusion: Don’t Wait for the Price Hikes
The market is shifting. The brands that survive 2026 will be those that prioritise stability and local compliance over the lure of “cheap” imports. By partnering with Xyfil, you secure your margins, satisfy the regulators, and give your customers a superior, British-made product.
Ready to protect your brand from the 2026 tax storm? Contact the Xyfil team today to learn more about our white-label manufacturing and how we can help you transition your production to the UK.