30 May 2012

UK govt kills hot pasty tax

5:04 am on 30 May 2012

The British government is ditching plans to tax Cornish pasties, sausage rolls and other hot snacks after critics accused it of targeting working families.

The government announced plans in March to close a loophole that allowed bakeries to serve hot takeaway food without incurring 20% VAT (value-added tax).

Under the revised plans, food which is cooling rather than being kept warm in a heated display cabinet will not be liable for VAT.

Treasury minister David Gauke told the BBC that the new regime would be as simple as possible to apply".

The issue has been embarrassing for Prime Minister David Cameron, who had to fend-off suggestions that the proposed tax highlighted his lack of "common touch".

He earlier said it was unfair that takeaway restaurants such as fish and chip shops had to charge VAT on hot food, when bakeries and supermarkets did not.