Chancellor George Osbourne is to reverse the decision to charge 20% VAT on hot takeaway food
As long as the food is cooling naturally after being heated, such as resting in a glass cabinet, they will be tax-free.
Food provided in heat-retaining packaging such as foil boxes or kept under hot plates and heat lamps will still be levied, however.
A Treasury spokesperson said, “The budget announced a consultation on a change to VAT on hot take-away food, designed to remove inconsistency and ambiguity in the system and level the playing field across the take-away food market. After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply.
“We have addressed these in a way that allows us to remove the inconsistent VAT treatment, while not imposing any additional requirement on businesses to test the temperature of their products,” he added.
Bakeries across the country have welcomed the u-turn and thanked supporters nationwide that forced the Government to change its policy.
Ken McMeikan, chief executive at Greggs, said, “They [the Government] have listened to us, they took on our proposal and went with that. We don't store savouries in a heated environment or use heat retaining packages for our savouries, we don't cook to order, we don't market them as hot, but if we did any of that then that would now be subject to VAT.
“The changes follow a tremendous showing of support. We are indebted to the people of the North East who signed our petition,” he said.