VAT update- zero rating of food

Date

VAT food

Posted by

Share the article

Share on facebook
Share on twitter
Share on linkedin

Share the article

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

In the UK most basic food stuffs are zero rated for VAT purposes. However, the definition of ‘basic’ is not straightforward and many of the foods are zero rated because of historical legislation dating back to the introduction of VAT in 1973.

VAT Notice 701/14: food has recently been updated. The notice explains what types of foods are zero rated and standard rated for VAT. The notice includes many examples of different food categories. Famously, cakes are zero rated but not all biscuits. However, biscuits wholly or partially covered in chocolate are standard rated. In a landmark case concerning Jaffa Cakes the VAT Tribunal had to decide whether a Jaffa Cake was a cake or a biscuit (in case you were wondering, the court ruled it was a cake and hence zero rated).

The main change in the updated version of the VAT notice refers to the temporary reduced rate of 5% for hospitality, holiday accommodation and attractions that remains in place until 30 September 2021. This temporary 5% reduced rate of VAT applies to the supplies of food (excluding alcoholic drinks) for consumption on the premises on which it is supplied and to supplies of hot takeaway food (excluding alcoholic drinks). The 5% reduced rate will be followed by the introduction of a new reduced rate of 12.5% from 1 October 2021, that will be effective until 31 March 2022, at which point supplies will revert to the 20% standard rate.

If you have any questions about the VAT notice or the temporary reduced rate for hospitality get in touch. Speak to your usual FC contact, email us at hello@farnellclarke.co.uk or come and visit us.

More articles

Tax when you sell a business property
Tax when you sell a business property
June 11, 2021
 by Rod Love-Jones
There are various methods at your disposal to reduce or delay the amount of Capital Gains Tax (CGT) when you sell a property that has been used for business purposes. For example, Business Asset
fuel rates
New advisory fuel rates published
June 11, 2021
Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly....
VAT food
VAT update- zero rating of food
June 10, 2021
In the UK most basic food stuffs are zero rated for VAT purposes. However, the...