Healthy foods ‘unfairly miss out’ on VAT break
Food and drink deemed to be ‘essential’ is exempt from a 20% VAT, while ‘luxuries’ aren’t.
However, there are examples of non-essential products that are exempt, according to Huel. Huel makes a powdered food, which it claims is a healthy meal replacement.
The rulings, which HM Revenue & Customs (HMRC) brought into force in 1994 and updated last year, were intended to discourage the purchase of unhealthy ‘junk’ foods by making them subject to VAT, said Huel founder Julian Hearn.
However, products such as millionaire’s shortcake, white chocolate cake and frozen ready meals are exempt from VAT, while fruit smoothies, cereal and protein bars aren’t.
Bring down costs
“The incentive to bring the costs of healthy foods down is a very positive thing,” said Hearn.
“There are places where the categories don’t seem to make sense and may not be quite up-to-date with our knowledge and lifestyle.”
Foods such as gingerbread, chocolate chip cookies and toffee apples are exempt from the VAT, while items such as frozen yogurt, Weight Watchers chocolate wafers and diabetic chocolate are not.
Hearn added: “We need to remember that, in principle, the scheme is designed to help us eat well for less. There are certainly improvements that can and should be made to help develop it further.”
However, an HMRC spokesman said that food and drink for human consumption should have a zero VAT rating, unless it is designated non-essential. It was the Treasury’s role, and not the HMRC’s, to decide which products were exempt from VAT, he added.
Concerned about sugar
Meanwhile, more consumers are becoming concerned about the amount of sugar in their food and drink, according to new data from the Bridgethorne Shopper Index.
Three quarters of the 750 consumers surveyed were buying fewer sugary products and more than 27% were switching to lower sugar options.
Bridgethorne md John Nivens said: “Sugar is clearly the biggest concern, perhaps indicating a long-term shift in shopper and consumer behaviour and attitudes.”
