The cost to The Exchequer

The cost to The Exchequer

Most food / drink which is for human consumption is zero-rated VAT, however there are some exceptions. These include confectionary, ice cream, beverages and savoury snacks.* Within each group, there are however further exceptions and logic appears to have gone amiss. For example, why are toffee apples and gingerbread men zero-rated, whilst cereal bars are standard-rated? This is a tax system which isn’t aligned with modern eating habits and which fails to work in the interests of public health. 

But how much will our proposed change cost?

We can identify the total UK market value of each food group which is currently subject to the standard rate of VAT. Within each group, we can estimate the market share of all products which can make reduced sugar nutrition claims – a generous estimate is an average of 5%. From this we can estimate that the total cost to The Exchequer, if these products were subject to the reduced rate of 5% as opposed to the standard rate of 20%, would be circa £101 Million. 

This is a drop in the ocean in comparison to the wider costs of obesity. Let’s make some ripples. 

* https://www.gov.uk/government/publications/vat-notice-70114-food