U-turn on pasty tax

Butchers and bakers are heralding victory, after the government backed down on its decision to impose a ‘pasty tax’.

he partial u-turn comes after a nationwide campaign to prevent Chancellor George Osborne from adding VAT to freshly baked pasties and pies, which he said it would close a ‘loophole’ in the law. 

VAT is currently not charged on most food and drink or hot baked goods, but is charged on takeaway food which is to be eaten hot.

The proposals would have seen VAT added to all food sold above ambient temperature, how an amendment has been introduced allows butchers’ to continue selling pasties and pies that are cooling down having been taken out of the oven, (rather than being kept in a heated cabinet), without attracting VAT.

The Chancellor's plans hit a huge wave of opposition from butchers, bakers, retailers and the general public with more than 500 people attended a rally in Downing Street to protest at the plans. They handed the government a petition of half a million signtures opposing the ‘unfair’ tax.

In April, the British Retail Consortium (BRC) submitted evidence to MPs to demonstrate that the proposed tax would hit people who could least afford it hardest. It claimed the move would lead to job losses and cause further damage to the already beleagured high street.

It said its evidence showed that people would switch from hot pasties and sausage rolls to cheaper, zero-rated, products meaning that the Chancellor would be damaging to retailers and suppliers, but raising little extra tax revenue.

>BRC speaks out against 'pasty tax'