The Coronavirus pandemic has seen a surge in individuals growing their own produce at home or on allotments, and with garden centres re opening, many will want clarification on the VAT treatment of items such as grow-your-own herbs which come with a ceramic planter and compost, as well as either seeds or young plants.
Whilst ornamental plants and seeds that produce such plants, are standard-rated, food for human consumption is zero-rated. This includes not only fruits and vegetables, but also their means of cultivation such as seeds and spores.
Although in most cases it will be obvious which plant species are generally accepted as grown primarily for culinary use or to produce food, (VAT Notice 701/38 provides specific guidance) , there are some categories which are not so obvious, in particular herbs and aromatic plants.
The guidance states
- They have been raised according to the conditions required by the Food and Environment Protection Act 1985 (in cases of doubt, you may need to supply documentary evidence of this).
- They have been specifically held out for sale as culinary herbs (for example, described as such on invoices or in catalogues) and, where appropriate, displayed apart from ornamentals with other culinary herbs.
- They are supplied in individual pots (not in bedding strips) of a size less than 2 litres.
- In the case of bay plants, they do not exceed 50 centimetres in height, nor have they been clipped, shaped or topiarized in such a way as to specialise them as ornamentals.
In terms of the growing kits, again Notice 701/38 provides some clarification in paragraph 6 where it states:
Plant-growing kits or plant-starter kits typically consist of seeds, growing medium and some form of container, together with fertiliser and an instruction leaflet. Such kits are generally standard-rated regardless of whether the seeds are of a kind which would normally be zero-rated.
But the kit may be zero-rated provided:
The seeds are zero-rated and the standard-rated element of the kit (for example, growing medium, fertiliser and pot) accounts for less than 10% of the total cost; and the planting medium, which is impregnated with edible vegetable or fruit seeds, is no more than a means of simplifying the planting of the seeds (for example, peat cubes of less than 125cc impregnated with seeds, or thin layers of tissue incorporating seeds).
In the case of those ‘ready to go’ items, business owners will need to check that the ceramic container and compost elements meet that 10% test, otherwise there will be a mixed supply and an allocation will have to made between the different VAT liabilities. Information on fair and reasonable division can be found in section 31 of VAT Notice 700 
Reproduced from Croner Taxwise