Government U-turns on VAT on pasties and static caravans
The Government has changed its mind on two controversial VAT measures announced in March's Budget.
The Government has announced that it is scrapping its Budget plans to charge VAT on hot baked goods such as pasties and sausage rolls.
It has also cut the rate of VAT payable on static caravans from 20% to 5% and delayed the introduction of the new rate from October until April next year.
The U-turns follow sustained campaigns by groups including bakers and holiday park owners.
VAT will continue to be charged on hot baked goods that are kept in hot cabinets, for example in a fish and chip shop. However, if goods are taken out of the oven and left to cool down on shelves before being sold they will be exempt.
Other foods sold from supermarket hot cabinets, such as rotisserie chickens, will still be liable for VAT as planned.
It’s estimated the changes will cost the Treasury around £70 million in lost revenue.
Chancellor George Osborne has already had to promise £30 million to the Church of England to compensate for VAT being added to alterations to listed buildings.
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