VAT is 50 this year – and to ‘celebrate’ Rosie Murray-West looks at how
savvy shopping can save you money.
Most of us don’t realise we’re being charged VAT on products we consume every day, but this tax – levied at as much as 20 per cent – is being passed on to us in the form of higher prices.
It’s a complex area and there are many exceptions that don’t attract VAT. Pick the right ones, though, and you may end up paying far less for groceries, clothes and other items. Here are some swaps worth making.
Swap nuts and dried fruit from the snack aisle for nuts and dried fruit from the baking aisle
Pages of legislation have been devoted to whether nuts attract VAT and when you buy these products, it’s all in the preparation.
Roasted and salted nuts from the snack aisle attract tax. Toasted or untoasted nuts, such as almonds, from the baking aisle don’t.
Nuts in their shells don’t attract VAT, and these include pistachios, even though they’re usually sold for snacking while still in their shells.
Dried fruit is VAT-free as long as it’s packaged for baking. If it’s packaged for snacking, it attracts 20 per cent tax, so it almost always pays to slip round to the baking aisle for products such as these.
As an aside, other roasted snacks such as chickpeas – even when sold alongside nuts for snacking – don’t attract VAT.
Swap takeaway burgers for fresh-from-the-oven pasties
Food that’s heated up to take away, such as a burger or hot dog, will incur 20 per cent VAT. However, there’s a grey area when it comes to products such as sausage rolls and pasties, which must be heated to cook them.
These are defined as ‘food that is designed to cool down’, so as long as they haven’t been heated up again, you can enjoy them fresh from the oven without VAT being charged.
Swap cereal bars for flapjacks
The taxman defines a flapjack as a ‘cake of common perception’, so it has always been zero-rated for VAT. But, as flapjack makers grew more innovative, the HMRC manual notes, ‘the difference between flapjacks and cereal bars has narrowed’. Cereal bars are defined as confectionery, which attracts VAT of 20 per cent, as they are ‘sweetened items of prepared food normally eaten with the fingers’.
According to the taxman, a flapjack becomes a cereal bar when it has any other cereal in it apart from oats, or when it deviates too far from a flapjack as defined in 1973. ‘Minor variations’, such as dried fruit, raisins and chocolate chips, are allowed.
Swap adult clothes and shoes for children’s clothes at the same size
Those with smaller feet and bodies can save VAT on clothes and shoes. Adult clothing attracts VAT but children’s doesn’t.
The zero per cent VAT band is based on the average size of a child on their 14th birthday, meaning those with taller children pay more for clothes for longer. Boys’ shoes up to size six-and-a-half don’t attract VAT, nor do girls’ shoes up to three-and-a-half. Bras should be no bigger than a 34B if you don’t want to pay VAT.
Swap chocolate-covered shortbread for millionaire’s shortbread
It may not be enough to make you a millionaire, but there’s an odd rule about shortbread that might seem to contravene the rules of VAT.
A chocolate-covered shortbread biscuit is a luxury item, attracting VAT at 20 per cent. Add a layer of caramel, though, and you’ve got a millionaire’s shortbread that is zero rated – because it’s classed as a cake.
Swap prosecco cocktails for prosecco jelly
Alcohol attracts VAT but desserts don’t. Ocado argued that its sparkling prosecco and summer fruit jelly was a dessert, as was its sparkling jelly shot. The result was a score draw with the tribunal – the jelly shot counts as taxable alcohol but the prosecco jelly is a fruit dessert.
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