Peach Report

Budget: Tax change on hot takeaway food

21 March, 2012

The Government will start taxing takeaway food sold by supermarkets and other retailers under plans laid out in the Budget.

As Peach Report has reported, the issue of VAT on takeaways has been a thorny one, with a European ruling last year suggesting that hot food and drink should be considered a supply of goods rather than a catering service.

Chancellor George Osborne today promised to straighten out anomalies in the tax system. He said while unveiling his Budget: “Hot takeaway food on high streets has been charged VAT for more than 20 years, but some new hot takeaway products in supermarkets are not… We're publishing our plans today to remove loopholes and anomalies.”

The detail of the plans has yet to be finalized, but it is more likely that supermarkets will be asked to pay VAT on food-to-go rather than restaurants and takeaways being suddenly made exempt. Tim Martin, founder of J D Wetherspoon, has complained that pubs and restaurants would have to continue to pay VAT on food while supermarkets pay nothing.

The broad exemption of food from VAT would remain, Osborne added.