The share of beer and tobacco sales made up of illicit goods has increased year on year, according to the latest Government tax gap estimates.

The figures show that the illicit trade in beer, spirits, tobacco, ciders, premix cans, wines and gambling cost the UK Government £3.1bn last year – more than double the cost of the recent partial restoration of the Winter Fuel Allowance for pensioners.

The mix of ‘actual ‘ and ‘imputed’ data for duty tax gaps showed illicit beer accounted for 16% of all sales last year, up from 9% the year before, representing £600m in duty lost.

For total tobacco duty, the illicit trade increased its share from 13.5% to 13.8%. This overall illicit tobacco market share rise came despite there being no increase in illicit sales, according to the government’s figures.

The duty lost from illicit cigarettes remained at £800m last year while duty lost from roll-your-own (RYO) tobacco fell by £200m to £600m.

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The illicit tobacco market share rise was instead driven by a significant drop in the value of legitimate tobacco sales, as supported by recent figures from cash and carries showing tobacco sales being down 9% year-on-year.

Anti-tobacco group Action on Smoking and Health (ASH) claimed the ‘static’ level of illicit tobacco sales ‘contradicts tobacco industry claims that regulation of tobacco and tax increases are fueling the illicit market’,

ASH chief executive Hazel Cheeseman added: “Well-worn tobacco industry arguments that regulations or taxes will explode the illicit market must be taken for what they are – the desperate attempts of a dying industry to prolong its existence.”

However, tobacco manufacturers have previously doubted the accuracy of the Government’s tax gap estimates, stating their own figures show significant increases in the illicit trade.

Spirits were the only convenience store product to show a decline in illicit market share in the latest duty-gap estimates, falling from 1.5% to 1.4% last year, with illicit sales now worth £100m in lost duty – the same as the year before.

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