What VAT Applies to Food Items?

VAT on food items

What VAT Applies to Food Items?

Are you a VAT registered business? If yes, and you want to figure out how VAT is applicable on your food items, this post is for you. Find out what VAT applies to food items.  Our accounting experts dig deeper into what VAT applies to the food supply, general food products, and home consumption food items. Take a look.

 

VAT on Food Items

 

Apply a zero rate on all foodstuffs. Some items include:

  • Raw meat and fish
  • Vegetables and fruit
  • Cereals, nuts, and pulses
  • Culinary herbs

Whether you supply these unprocessed foodstuffs direct to the public or for use as ingredients in the manufacture of processed foods. They’re fit for human consumption.

 

In summary:

 

Food item Rate of VAT

                Notes

Meat and poultry, for example, beef, lamb, pork, chicken and so on Zero rate Butchered or complete carcass
Exotic meat, for example, horse, ostrich, crocodile, kangaroo, and so on Zero rate Butchered or complete carcass
Live animals Zero rate If of a species generally used for human consumption
Live horses Standard rate Not a recognized food species, see VAT Notice 701/15: animals and animal food
Animal products other than for human or animal food Standard rate For example, for medicinal purposes
Fish Zero rate If fit for human consumption
Live fish Zero rate If of a species generally used for human consumption
Ornamental fish, such as Koi carp Standard rate If prepared for human consumption, they are zero-rated
Fish for bait Standard rate Unless fitting for human consumption
Fish withdrew from the food market under EU fisheries rules Zero rate If of a quality fit for human consumption
Vegetables and fruit Zero rate If of a quality fit for human consumption. However, for growing plants and seedlings, see VAT Notice 701/38: seeds and plants
Culinary herbs and spices Zero rate See VAT Notice 701/38: seeds and plants
Ornamental vegetables Standard rate For example, cabbages, that are grown for their appearance rather than consumption
Fruit and vegetable pulps, such as pureed apple used for cooking Zero rate Pulps that are to be made into beverages, for example, fruit and vegetable smoothies are standard rated – see paragraph 2.2
Juice and juice concentrates Standard rate Beverages or products for the preparation of beverages are standard rated – see paragraph 2.2
Cereals Zero rate However supplied, such as growing crop, bulk, or retail. See also VAT Notice 701/15: animals and animal food
Nuts and pulses Zero rate If raw and unprocessed for human consumption. Also roasted or salted nuts in their shells, however, supplied bulk or retail – see also VAT Notice 701/15: animals and animal food
Nuts if shelled and either roasted or salted Standard rate

 

VAT on Home Cooking and Baking Items

 

Use zero rates at a product sold for use as an ingredient in home cooking or baking:

  • Expect measurable nutritional content.
  • It’s used solely or predominantly in food manufacturing.
  • It’s one of the excepted items, see paragraph 2.2

 

 

In summary:

 

Food item Rate of VAT Notes
Prepared cake, sauce, soup, and other mixes Zero rate For making up in the home kitchen
Mixes for ice-cream and similar frozen products Standard rate See paragraph 3.5
Vegetable oils, maize (corn), rapeseed, groundnut (Arachis), olive (including olive oil BP), almond (but not bitter almond oil), sesame seed, sunflower seed, palm kernel, walnut, soya, and blends of these Zero rate Even if they’re used as a massage or cosmetic oils, provided they’re of a type and grade suitable for culinary purposes, and they don’t contain any substance, such as perfume, that would make them unsuitable for culinary use
Linseed oil and essential oils Standard rate Not food
Waste and used oil for recycling Standard rate May be eligible for relief as animal feed – see VAT Notice 701/15: animals and animal food
Starch and gelatine Zero rate Provided they are edible. This doesn’t apply to starch for stiffening shirt collars, or ‘photographic’ gelatine
Salt for culinary use Zero rate Including fine salt, dendritic salt, and, in retail packs (12.5kg or less) – rock and sea salt
Non-culinary salt Standard rate Including compacted salt (pellets and tablets), granular salt, rock salt (other than retail packs), soiled salt, salt for dishwashers and salt of any type for non-food use
Sweeteners Zero rate Including natural products like honey and sugar, and artificial products like saccharin, aspartame, and sorbitol
Flavorings and flavor enhancers Zero rate Including natural essences such as peppermint and vanilla, culinary rosewater and synthetic flavorings
Flavoring mixes Zero rate Including dusting powders, blended seasonings and marinating mixes, whether natural or synthetic
Monosodium glutamate Standard rate Not a food product in its own right
Other food additives such as baking powder, cream of tartar, rennet, lactase and pectin for culinary use Zero rate
Non-food additives such as bicarbonate of soda, saltpeter and other single chemicals for use in brining or other processing of meats or fish Standard rate

 

How Much VAT is Applicable on Food Items?

 

When you’re supplying processed or prepared food, don’t forget to always check up on a standard rate – see paragraph 2.2. It’s the right time to decide whether your supplies are in the course of catering and therefore standard-rated – see paragraph 2.1.

 

In summary:

 

Food item Rate of VAT Notes
Canned and frozen food other than ice cream and similar frozen products Zero rate These have the same liability of the unprocessed product, such as peas or fish
Ice creams, sorbets, frozen yogurt (designed to be eaten as such) or ice lollies Standard rate See paragraph 3.5
Chilled or frozen ready meals, convenience foods, and so on Zero rate For further preparation, such as reheating at home
Cold sandwiches Zero rate Zero-rated as prepared food unless a supply made in the course of catering when standard rated – see paragraph 2.1

 

What VAT is Applicable to Bakery products?

 

Some bakery products like cakes, biscuits, and other items come with a higher VAT. Talk about confectionary standard rates:

  • Biscuits wholly or partly covered in chocolate (or some product similar in taste and appearance) are included in these.
  • Any item of sweetened prepared food, other than cakes and non-chocolate biscuits, which is normally eaten with the fingers

See also paragraph 3.6.

 

Examples of bakery products and their VAT liability:

Zero-rated Standard rated
Bread and bread products such as rolls, baps, and pitta bread The same products supplied as part of a hot takeaway meal, such as a hot hamburger in a bun, or a hot kebab in a pitta or to ‘eat-in’ – see VAT Notice 709/1: catering and take-away food
Cakes including sponges, fruit cakes, meringues, commemorative cakes such as a wedding, anniversary or birthday cakes Cakes supplied in the course of catering – see VAT Notice 709/1: catering and take-away food
Slab gingerbread
Flapjacks Cereal, muesli and similar sweet-tasting bars
Marshmallow teacakes – with a crumb biscuit or cake base topped with a dome of marshmallow coated in either chocolate, sugar strands or coconut

Scottish snowballs – a dome of marshmallow coated with chocolate or coconut, aerated and boiled (not baked), they have a short shelf life and harden rapidly when removed from the packet

Other types of snowballs such as Swedish snowballs with a longer shelf life
‘Crunch cakes’ corn flakes or any other breakfast cereal products coated in chocolate or carob and pressed into brittle flat cakes Florentines
Caramel or ‘millionaire’s’ shortcake consisting of a base of shortbread topped with a layer of caramel and (usually) chocolate or carob Shortbread biscuits partly or wholly chocolate-covered
Lebkuchen Coconut ice

 

VAT on Cake decorations

 

Sell inedible cake decorations with a cake, such as silvered horseshoes or bride and groom figures with wedding cakes.  You don’t have to treat your supply as a mixed supply and account for VAT on the decoration.  Unless it’s a separate item in its own right.

For example, a toy has been sent out with a birthday cake as an additional item. The ideal way to deal with a scenario like this would be to count the cake and the toy as a single party, see paragraph 6.1.

 

Commonly found products used as cake decorations:

 

Zero-rated Standard rated
Chocolate couverture, chips, leaves, scrolls and so on (designed specifically as cake decorations) Chocolate buttons (except packets of mini-chocolate buttons sold for use in baking
Jelly shapes, sugar flowers, leaves, etc designed specifically as cake decorations Chocolate flakes (except when they are supplied within the bakery and ice cream industries, when they may be zero-rated if sold in packs of one gross or more, clearly labeled ‘for use as cake decorations only: not for retail sale’)
Hundreds and thousands, vermicelli and sugar strands Any other items which are sold in the same form as confectionery
Royal icing
Toasted coconut and toasted almonds held out specifically for baking use
Cherries used in baking (often described as ‘glacé’)
Edible cake decorations whether sold as part of a cake or sold separately unless they fall within the exceptions relating to confectionery (see paragraph 3.6) or roasted nuts (see paragraph 3.8) Inedible cake decorations sold on their own

 

What VAT is Applicable on Buiscuits

 

Biscuits covered or partly covered in chocolate or some other products similar in taste and appearance to chocolate are standard rated.

Examples to help determine whether a product is zero or standard-rated:

Zero-rated Standard rated
Chocolate chip biscuits where the chips are either included in the dough or pressed into the surface before baking All wholly or partly coated biscuits including biscuits decorated in a pattern with chocolate or some similar product
Bourbon and other biscuits where the chocolate or similar product forms a sandwich layer between two biscuit halves and is not continued onto the outer surface Chocolate covered shortbread
Jaffa cakes Gingerbread men decorated with chocolate unless this amounts to no more than a couple of dots for eyes
Biscuits coated with caramel or some other product that doesn’t resemble chocolate in taste and appearance Ice cream wafers partly covered in chocolate such as ‘chocolate oysters’

 

VAT on Hot food

 

Many bakery products, particularly bread, pies, pastries, and other savories, are baked on the retail premises. These are sold while still hot. The borderline between ‘freshly baked’ and ‘hot takeaway’ food can be a difficult one, and if you sell any hot food you’re advised to read VAT Notice 709/1: catering and take-away food which sets out the distinction in more detail. If you’re still in any doubt contact the VAT: general inquiries helpline.

 

VAT on Ice cream and similar frozen products

 

You must standard rate your supplies of any product designed to be eaten while frozen.

Products which are supplied frozen, but have to be cooked before they can be eaten, or which have to be thawed completely before eating, are zero-rated.

Examples to help determine whether a product is zero or standard-rated:

Zero-rated Standard rated
Baked Alaska Ice cream and ice lollies
Cream gateaux Ice cream gateaux and cakes, including arctic rolls
Mousse Water ices, sorbets, and granitas
Frozen yogurt which needs to be thawed completely before it can be eaten and which has been frozen purely for storage or distribution Frozen yogurt
Desserts which are equally suitable for consumption frozen or defrosted (unless primarily designed for eating frozen and made substantially of ice cream or similar products) Powders and mixes for making ice creams and similar frozen products, including incomplete mixes and emulsions used by the trade and fruit syrups sold in plastic tubes for home freezing as ice lollies
Wafers and cones (unless wholly or partly covered in chocolate or a similar product) Wafers and cones sold with ice cream or similar products
Toppings, sauces, and syrups unless sold with ice cream or similar products

 

VAT on Confectionery

 

As mentioned above, a standard confectionery rate of 5% includes all food supplies. Standard-rated confectionery includes chocolates, sweets and candies, chocolate biscuits, and any other ‘items of sweetened prepared food which is normally eaten with the fingers.’ Items of sweetened prepared food don’t need to have added sweetening if they are inherently sweet, for example, certain fruit and cereal bar products.

Here are some examples of the standard and zero-rated confectionery:

Zero-rated Standard rated
Cakes including sponge cakes, pastries, eclairs, meringues, flapjacks, lebkuchen, marshmallow teacakes, and Scottish snowballs Chocolates, bars of chocolate including those containing nuts, fruit, toffee, or any other ingredients, diabetic chocolate, liqueur chocolates, and similar sweets
Chocolate spread, liquid chocolate icing, chocolate couverture, and chocolate chips, strands, vermicelli, mini-buttons, etc held out for sale solely for culinary use; chocolate body paint Sweets, pastilles, gums, lollipops, candy floss, sherbet, chewing gum, bubble gum, Turkish delight, marshmallow, fondant, and similar confectionery
Biscuits coated with icing, caramel or some other product different in taste and appearance from chocolate Compressed fruit bars and other items of prepared dried fruit confectionery that are sweet to the taste
Chocolate cups Sweetened popcorn
Toffee apples and other apples on a stick covered in chocolate, nuts and so on Nuts or fruit with a coating, for example of chocolate, yogurt or sugar
Ginger preserved in syrup drained ginger or dusted ginger can be zero-rated as long as it’s not held out for sale as confectionery Crystallized, sugared or chocolate-covered ginger
Candied peels, angelica, drained cherries for use in home baking often described as ‘glacé’ cherries and cocktail or maraschino cherries Drained, glacé or crystallized fruits including Petha, Marrons glacés
Halva (unless coated with chocolate or chocolate substitute or held out for sale as confectionery) Bars consisting mainly of seeds and sugar or other sweetening matter
Edible cake decorations Cereal bars, whether or not coated with chocolate, except for bars which qualify as cakes
Sweet tasting dried fruit held out for sale as snacking and home baking Sweet tasting dried fruit held out for sale as confectionery, snacking
Traditional Indian and Pakistani delicacies such as barfis, halvah, jalebi, laddoos; and traditional Japanese delicacies Slimmers’ meal replacements in biscuit form that are wholly or partly covered in chocolate or something similar in taste and appearance

 

VAT on Beverages:

 

All the drinks are standard rated. These include all alcoholic and nonalcoholic beverages.  For VAT purposes, a beverage is a:

  • The liquid commonly consumed to increase bodily liquid levels, to slake thirst, to fortify or to give pleasure
  • Number of non-alcoholic beverages and related preparations, extracts are, however, specifically allowed zero-rating – these are listed at paragraph 3.7.2

 

What’s VAT on Alcoholic Drinks?

 

Use the standard rate for all your supplies of drinks containing alcohol. Whether you sell them for consumption on or off your premises. Examples include:

  • Beer, cider, and perry (including black beer and shandy)
  • Wine (including made-wine and fermented communion wine)
  • Spirits and liqueurs

This standard rating only applies to beverages containing alcohol. Other food products containing alcohol follow the normal liability rules, for example:

Zero-rated Standard rated
Fruit preserved in alcohol Liqueur chocolates
Alcoholic dessert jellies Semi-set alcoholic jellies designed to be swallowed as cocktails
Rum babes

 

VAT on Non-alcoholic beverages

 

Some non-alcoholic beverages are zero-rated. Here are some examples:

Zero-rated Standard rated
Milk and flavored milk drinks (including milkshakes) Flavorings for milkshakes (except preparations and extracts of cocoa or coffee, which are zero-rated)
Tea, maté, herbal teas, and similar products, and preparations and extracts of these (but this does not include soft drinks containing tea as only one of several ingredients) Purgative and laxative ‘teas’, such as senna, and similar medicinal teas
Cocoa and drinking chocolate and other preparations and extracts of cocoa Mineral, table and spa waters held out for sale as beverages
Coffee and chicory and other roasted coffee substitutes, and preparations and extracts of these (including coffee extracts for flavoring milkshakes) Alcohol-free beer and wines
Preparations and extracts of meat, yeast, egg or milk Ginger, glucose, honey, peppermint, and barley water drinks
Syrups, crystals, powders, and flavorings for making any standard-rated drink
Carbonated drinks such as lemonade, cola, and mixers such as tonic and soda
Fruit cordials and squashes

All hot beverages and any drinks, including zero-rated drinks sold for consumption on your premises are standard rated. Cold drinks that are zero-rated in their own right, for example, milk and are supplied for off-premises consumption can be treated as zero-rated. See VAT Notice 709/1: catering and take-away food for supplies made in the course of catering.

 

VAT on Drinks which are not beverages

 

These are the drinks include beverages that are energy-based or the ones that boost your energy level. More information about these products can be found in this notice in paragraph 4.6.1.

The following drinks (and the mixes and so on for making them) can be zero-rated:

  • Plain soy or rice milk (unflavoured and unsweetened)
  • Coconut milk
  • Meal replacement drinks for slimmers or invalids
  • Unfermented fruit juice intended specifically for sacramental purposes (see paragraph 4.7)
  • Angostura Bitters

 

VAT on Ingredients for home beer and winemaking

 

Talk about standard rated prices for home beers and beverages. Further details have been included here. You can further read up on these items here.

  • Kits for home brewing, winemaking and so on
  • Retail packs of hopped malt extract, malted barley, roasted barley, hops
  • Special wine and brewers’ yeasts
  • Grape concentrates
  • Retail packs of foods, which are specialized to home winemaking, such as dried elderberries or sloes for making country wines

You must also standard rate any general food product that you hold out for sale specifically for home winemaking or brewing, such as fresh, dried or canned fruit, fruit juices and concentrates, barley, glucose, and plant malt extract. In this context,  hold them out for sale for home brewing and winemaking if you:

  • Sell them through a retail outlet that specializes in home brewing and winemaking materials
  • Sell them in the home brewing and winemaking department or section of a general outlet
  • Label, advertise or otherwise display them as materials for home brewing or winemaking, or provide them packaging any brewing or winemaking recipes, or instructions for using them in the making of beer or wine (for example, the amount of sugar required for their fermentation or the type of yeast to be used)

 

VAT on Savoury snacks: General

 

It’s always a good idea to work on the tax value of each mixture and assortment. This also helps you calculate the total tax amount due. Take a look at the following categories of standard-rated items:

  • Potato snacks and similar products, made from potato or potato flour or potato starch. Although a small amount of potato flour in the recipe of a savory biscuit does not make biscuit standard-rated.
  • Snacks made by the swelling of cereals – this applies only to products produced by the puffing of individual kernels or by an extrusion process where the air is introduced under pressure into the cereal flour or starch paste during manufacture to produce an expanded, aerated product
  • Roasted and salted nuts

For standard rating to apply the potato and cereal products must also be packaged and ready to eat without any further preparation by the customer. Packaged means to be pre-packed for retail sales in a sealed bag, carton, or another container. Roasted or salted nuts are standard-rated even when sold loose.

Savory snacks not falling within one or other of these 3 categories are zero-rated.

See paragraph 6.2 for advice on mixtures containing both standard and zero-rated constituents, for example, Bombay Mix.

 

Examples of products and their VAT liability:

Zero-rated Standard rated
Savory snacks consisting of sliced and dried or roasted vegetables other than potatoes for example beetroot, carrot, and so on Potato crisps, potato sticks, potato puffs, and similar products including those made from a combination of potato starch or flour and cereal flour
Tortilla chips, corn chips, bagel chips, cocktail cheese favorites, and Twiglets Savory popcorn (but not corn for popping for example ‘microwave’ popcorn)
Prawn crackers made from tapioca Prawn crackers made from cereals (but not unpackaged prawn crackers, for example, those supplied in unsealed bags as part of a takeaway meal)
Roasted pulses and legumes, for example, chickpeas and lentils Rice cakes (but not unflavoured rice cakes intended for consumption with cheese or other toppings)
Roasted or salted nuts supplied while still in their shells (such as ‘monkey nuts’ and pistachios), toasted coconut, toasted almonds, and other toasted chopped nuts held out for sale in retail packs specifically for home baking All other roasted or salted nuts

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