UK Illicit Cigarette Market Approaches Half of Consumption in 2025

In 2025, 45% of cigarettes smoked in the United Kingdom were illicit, up by 1.5 billion units from 2024. The illicit market now ranks second in Europe after France and is driven by criminal gangs operating “front” shops and by domestic factories producing illegal cigarettes.

KPMG report reveals almost half of UK cigarettes pay no taxAlmost half of UK cigarettes pay no tax, report shows

Philip Morris Limited identified two key factors: (1) “front” shops that disguise themselves as grocers, vape stores, candy shops, barbers or mobile-phone retailers, and (2) the relocation of illegal-cigarette factories into the UK, with several large raids reported in the past year. Smuggled brands originate from Turkey, Poland, Belarus and Middle-East free-trade zones.

Almost half of UK cigarettes pay no tax, report shows

• Philip Morris Limited – UK affiliate of Philip Morris International, sponsor of KPMG analysis.

KPMG report reveals almost half of UK cigarettes pay no tax

• Peter Nixon, Managing Director, Philip Morris Limited.

KPMG report reveals almost half of UK cigarettes pay no tax

• Catherine Goger, Illicit Trade Prevention Manager, Philip Morris Limited.

KPMG report reveals almost half of UK cigarettes pay no tax

• Organized Criminal Gangs (OCG) – Operators of front shops and illicit factories.

Almost half of UK cigarettes pay no tax, report shows

• 13% of UK cigarette consumption is legally purchased abroad.

KPMG report reveals almost half of UK cigarettes pay no tax

• 32.3% consists of counterfeit or contraband products.

KPMG report reveals almost half of UK cigarettes pay no tax

• Over 10 billion illicit cigarettes were consumed in 2025, costing more than £4.46 billion in lost tax revenue—enough to fund about 95,000 police officers.

KPMG report reveals almost half of UK cigarettes pay no tax

The tax loss reduces funding for services, while front shops are linked to drug sales, human trafficking, cybercrime, fraud, money laundering and intimidation of legitimate retailers.

KPMG report reveals almost half of UK cigarettes pay no tax

Philip Morris Limited urged the government to strengthen enforcement and introduce a robust licensing regime for tobacco retailers, noting current resources are insufficient to curb the illicit flow despite a decline in legal cigarette use.

KPMG report reveals almost half of UK cigarettes pay no tax

Industry analysts criticize organized crime gangs for exploiting the front-shop model, emphasizing that the gangs profit from multiple illicit markets while terrorising communities and lawful businesses.

Almost half of UK cigarettes pay no tax, report shows

All quantitative estimates stem from a KPMG analysis commissioned by Philip Morris International; no independent verification is provided, leaving a gap in external corroboration.

Almost half of UK cigarettes pay no tax, report shows

• “This should be a major wake-up call for the government; poorly resourced enforcement is depriving the UK of almost £4.5 billion a year. The past few years have been a boon time for organised crime gangs who are selling illicit cigarettes and vapes with impunity, ruining our high streets and communities.” — Peter Nixon, Managing Director, Philip Morris Limited

KPMG report reveals almost half of UK cigarettes pay no tax

• “The past few years have been a boon time for organised crime gangs who are selling illicit cigarettes and vapes with impunity, ruining our high streets and communities.” — Catherine Goger, Illicit Trade Prevention Manager, Philip Morris Limited

Almost half of UK cigarettes pay no tax, report shows

• “ Catherine Goger, illicit trade prevention manager at Philip Morris Limited, commented: “In our fight against these ‘front’ shops, we have expanded our undercover teams who gather evidence and intelligence in communities across the UK.” — Catherine Goger, Illicit Trade Prevention Manager, Philip Morris Limited

Almost half of UK cigarettes pay no tax, report shows

• “To drive illicit products off our high streets, the government needs to introduce a robust licencing scheme as soon as possible.” — Catherine Goger, Illicit Trade Prevention Manager, Philip Morris Limited

Almost half of UK cigarettes pay no tax, report shows

Philip Morris Limited plans to expand undercover operations while awaiting a licensing framework; enforcement agencies are likely to continue targeting front-shop networks and domestic illicit factories, as recent raids have shown.

Almost half of UK cigarettes pay no tax, report shows