In the UK most basic foodstuffs are zero-rated. However, the definition of ‘basic’ is not straightforward and many of the foods are zero-rated as a result of historical legislation dating back to the introduction of VAT in 1973.
VAT Notice 701/14: food has recently been updated. The notice explains what types of foods are zero-rated and standard-rated for VAT. The notice includes many examples of different food categories. Famously, cakes are zero-rated but not all biscuits are. However, biscuits wholly or partially covered in chocolate are standard rated. In a landmark case concerning Jaffa Cakes, the VAT Tribunal had to decide whether a Jaffa Cake was a cake or a biscuit (in case you were wondering, the court ruled it was a cake and hence zero-rated).
The main change in the updated version of the VAT notice refers to the temporarily reduced rate of 12.5% for hospitality, holiday accommodation, and attractions that remains in place until 31 March 2022. This temporary 12.5% reduced rate of VAT applies to the supplies of food (excluding alcoholic drinks) for consumption on the premises on which it is supplied and to supplies of hot takeaway food (excluding alcoholic drinks). The 5% reduced rate ended on 30 September 2021 and the current reduced rate of 12.5% will be in effect until 31 March 2022 at which point supplies will revert to the 20% standard rate.