Wednesday, 5 January 2011

VAT RISE ON FOOD - NOT SO SIMPLE AS IT SEEMS!

We all know that the basic rate of VAT went up yesterday from 17.50% to 20% and I was amazed last night to hear a BBC news announcer say that there was "no" VAT on food! He was implying that the rise did not affect food at all - an over simplification, in fact, quite incorrect.
The matter of VAT on food is overly complicated if not downright weird!
For example, McVitie's went to court some years ago to argue the point that its Jaffa Cakes are just that - cakes, so not vatable, whereas if they had been classed as a chocolate biscuit - yes, you guessed it- they would have had VAT added to their price. Incidentally, ordinary biscuits without chocolate coating are not vatable! In fact even chocolate chip cookies are not vatable - I suppose that's because the chocolate is on the inside not the outside (mainly).
It gets worse - an Arctic roll is vatable whilst cream gateaux are zero-rated, popcorn (ready-made) is vatable but microwave popcorn is not. Crisps are vatable, tortilla chips are zero-rated. Snacking raisins are vatable whereas raisins from the baking aisle are zero-rated. Flapjack bars are zero-rated but cereal bars are vatable and so will have risen in price yesterday - so you may save money by making your own - try my Seedy Flapjack Bars recipe!
It's a complete puzzle to me why things have been made so complicated, but if you want to know more, then take a look at the HMRC website. Although in all truth things are about as clear as mud on there as well!
If you shop in Tesco or Waitrose, items that are vatable are clearly marked on your receipt- if you have any old ones laying around the house it may be a good idea to check them. At least then you know which items that you buy, are going to go up and can vote with your feet and, where possible, avoid buying them.
In my opinion, all food should be zero rated. It is just ridiculous to try to classify some food items as a luxury and some not.


P.S. Also remember there is VAT on toilet rolls - so that is considered a luxury item then?

No comments: