Pasty VAT controversy

April 10, 2012, 10:39 AM GMT+0

Poll: 69% Britons say 'loophole-closing' VAT on hot food like pasties should not apply; 21% say should

Over two thirds of Britons say that hot food like pasties and sausage rolls should not be subject to VAT, compared to one in five who say that it should.

We asked Britons for their views on the hot 'pasty tax' in light of the recent decision by Chancellor George Osborne to levy VAT on food that is served hot, such as pasties and sausage rolls ‒ ostensibly to close a 'loophole' in the law.

  • 69% of Britons said that hot food, such as pasties and sausage rolls, 'should not be subject' to VAT, compared to 21% who said that it should
  • 23% of Britons say that they 'buy hot pasties and sausage rolls often', while 76% say they don’t

In his Budget late last month, Chancellor George Osborne explained that he would now levy VAT on hot food like pasties and sausage rolls, sold from outlets such as Greggs. Currently, food served in restaurants and takeaway shops is subject to VAT, while groceries sold in shops and supermarkets are generally free of tax.

Calls to scrap the tax

The addition of VAT ‒ which supporters say is only closing a loophole in already-existing legislation on food products ‒ has been met with an angry response from some consumers, many of whom say that they only buy hot savouries to eat ‘on the go’. Several Greggs outlets have seen petitions placed in their shops calling for the Government to scrap the new tax, supported by Greggs’s finance director Richard Hutton.

'At a time when ordinary, hard-working people are under enormous pressure, they need help in making their money go as far as possible, not to see an increased tax on something they didn’t have to pay tax on previously,' said Hutton. 'I believe that there will be job losses and closures of businesses as a direct result of the Chancellor’s proposals.'

The debate around VAT on hot food from high-street stores dates back to 1980, when Tory Chancellor Nigel Lawson applied the tax to hot food but exempted freshly baked products that were still warm from the bakery oven.

The new VAT rules involve a 20% rise in cost to pasties, sausage rolls, toasted sandwiches and rotisserie chickens sold hot in any shop.

See the survey details and full results here (pages 4-5)