You asked: Do we pay VAT on cakes?

Unlike sweets, cakes are considered to be a staple food and therefore zero-rated for VAT. Biscuits are also zero-rated unless they are a luxury item, which usually means they have chocolate on top.

Is there tax on cakes UK?

Under UK law no value added tax (VAT) is placed on biscuits or cakes. But critical to the controversial issue of Jaffa Cakes’ name, when a biscuit is covered in chocolate it becomes subject to the standard VAT rate of 17.5%.

Is there a cake tax?

Legal status. In the United Kingdom, value added tax is payable on chocolate-covered biscuits, but not on chocolate-covered cakes.

Do you charge VAT on takeaway cakes?

In the wording of UK tax law (and echoed by everyone, everywhere!), biscuits and cakes are deemed necessities. So, just like cold sandwiches, they too are zero rated. However, chocolate-covered biscuits fall into the ‘luxury’ category, and are subject to the full rate of VAT.

Do you pay VAT on sweets?

Under UK VAT law most food of a kind used for human consumption is zero rated. However, confectionery, including chocolates, sweets and biscuits, is liable to full VAT at 20%.

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Why are cakes not taxed?

Unlike sweets, cakes are considered to be a staple food and therefore zero-rated for VAT. Biscuits are also zero-rated unless they are a luxury item, which usually means they have chocolate on top.

Are Jaffa Cakes tax free?

It was a long and costly dispute, but McVities finally tasted sweet success and Jaffa Cakes were finally recognised as chocolate covered cakes. Now the £1.19billion Jaffa Cakes made every year are free of the consumer tax. This means those with a sweet tooth can more easily afford to have their Jaffa Cake and eat it.

Why is it called Jaffa cake?

Although the Jaffa Cakes were named after the Jaffa orange, McVitie & Price used a recipe of apricot, sugar and tangerine oil to create their famous jam-topped cake. McVitie’s say the oranges, a variety which can be linked to the ancient port city of Jaffa in Israel, are used to flavour the cakes.

Why is there no VAT on Jaffa Cakes?

The most widely reported aspect of the case was that upon going stale, a Jaffa cake goes hard like a cake rather than soft like a biscuit. Consequently, the tribunal decided that in fact, the humble Jaffa Cake is a cake and therefore a zero-rated foodstuff.

Is there VAT on icing sugar?

The main sugars used in food manufacture are sucrose, fructose, glucose, lactose and maltose. All are zero-rated.

Is there VAT on cakes and biscuits?

Although most traditional bakery products, such as bread, biscuits and cakes, are zero-rated, some confectionery is standard rated including: biscuits wholly or partly covered in chocolate (or some product similar in taste and appearance)

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What percentage is VAT?

The standard rate of VAT increased to 20% on 4 January 2011 (from 17.5%). Some things are exempt from VAT , such as postage stamps, financial and property transactions. The VAT rate businesses charge depends on their goods and services.

What items are zero rated for VAT?

Zero-rated items are goods on which the Government charge VAT but the rate is currently set to zero. The goods covered by this classification are items such as children’s clothes and footwear, water, basic foods, books and newspapers.

What food items do you pay VAT on?

Most food is VAT-free but you do pay VAT on some food. Some items for human consumption are standard-rated. This includes catering, alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water.

Are cakes zero rated for VAT?

VAT law states that “food of the kind used for human consumption” is zero-rated. However, there are exceptions to this rule including “confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some products similar in taste or appearance” which are standard-rated.

Are milkshakes VAT free?

Under the UK VAT Act, milk beverages and preparations are zero rated.

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