Notice

VAT Notice 701/14: food

Updated 15 December 2015

Foreword

This notice cancels and replaces Notice 701/14 (October 2011).

1. Introduction

1.1 What is this notice about?

This notice explains when food can be zero-rated. It has been updated from the 2011 version to include information about the liability of sports nutrition drinks.

1.2 Who should read this notice?

You should read this notice if you are a food:

  • producer
  • manufacturer
  • wholesaler
  • retailer

1.3 What law does this notice cover?

The VAT Act 1994 of which:

2. General VAT liability rules

2.1 Food supplied in the course of catering

You must always standard-rate food supplied in the course of catering, including hot take-away food. Further information can be found in VAT Notice 709/1: catering and take-away food.

2.2 Food not supplied in the course of catering

Most food of a kind used for human consumption (see paragraph 2.3) is zero-rated. There are, however, some exceptions as follows:

You must always standard-rate (SR)… but you can zero-rate (ZR)…
ice cream, similar products, and mixes for making them – see 3.5 frozen yoghurt that is designed to be thawed before being eaten
confectionery, apart from cakes and some biscuits, – see 3.6 drained cherries and candied peel
alcoholic beverages, – see 3.7 -
other beverages, and preparations for making them – see 3.7 milk and milk drinks, tea, maté, herbal tea, coffee & cocoa; and preparations of yeast, meat and egg
potato crisps, roasted or salted nuts and some other savoury snack products – see 3.8 -
products for home brewing and wine making – see 3.7 -

How these criteria apply to general and specialised food products is explained in section 3 and section 4.

2.3 What does ‘food of a kind used for human consumption’ mean?

A product is ‘food of a kind used for human consumption’ if:

  • the average person, knowing what it is and how it is used, would consider it to be food or drink; and
  • it is fit for human consumption

The term includes:

  • products eaten as part of a meal, or as a snack; and
  • products like flour, which, although not eaten by themselves, are recognised food ingredients

The term would not usually include:

  • medicines and medicated preparations
  • dietary supplements, food additives and similar products, which, although edible, are not food

Some produce that is unfit for human consumption, such as waste and contaminated food products (including used cooking oil), may be eligible for zero-rating as animal feeding stuffs – see VAT Notice 701/15: animals and animal food.

Produce which is unfit for either human or animal consumption (for example, abattoir offal sold for processing into fertiliser) is standard-rated.

2.4 Food processing services

If you apply a treatment or process to another person’s goods so that new zero-rated food products are produced, you can zero-rate your services. Further information can be found in VAT Notice 701/40: food processing services.

3. General food products

This section explains how the criteria for zero-rating explained at paragraph 2.2 apply to general food products supplied for both home consumption and for processing within the food industry.

If you are supplying food in the course of catering you should read VAT Notice 709/1: catering and take-away food.

3.1 Basic foodstuffs

You can zero-rate all supplies of unprocessed foodstuffs such as:

  • raw meat and fish
  • vegetables and fruit
  • cereals, nuts and pulses; and
  • culinary herbs

whether you supply them direct to the public or for use as ingredients in the manufacture of processed foods, provided they are fit for human consumption.

In summary:

Food Item Rate of VAT Notes
Meat & poultry – beef, lamb, pork, chicken etc. ZR Butchered or complete carcass
Exotic meat – horse, ostrich, crocodile, kangaroo, etc. ZR Butchered or complete carcass
Live animals ZR If of a species generally used for human consumption
Live horses SR Not a recognised food species, see VAT Notice 701/15: animals and animal food
Animal products other than for human or animal food SR For example, for medicinal purposes
Fish ZR If fit for human consumption
Live fish ZR If of a species generally used for human consumption
Ornamental fish – such as Koi carp SR If prepared for human consumption, they are zero-rated
Fish for bait SR Unless fit for human consumption
Fish withdrawn from the food market under EU fisheries rules ZR If of a quality fit for human consumption
Vegetables & fruit ZR If of a quality fit for human consumption. However, for growing plants and seedlings, see VAT Notice 701/38: seeds and plants
Culinary herbs and spices ZR See VAT Notice 701/38: seeds and plants
Ornamental vegetables SR For example cabbages, that are grown for their appearance rather than consumption
Fruit and vegetable pulps - such as pureed apple used for cooking. ZR Pulps that are to be made into beverages e.g. fruit and vegetable smoothies are standard rated- see paragraph 2.2
Juice and juice concentrates SR Beverages or products for the preparation of beverages are standard-rated – see paragraph 2.2
Cereals ZR However supplied, such as growing crop, bulk or retail. See also VAT Notice 701/15: animals and animal food
Nuts & pulses ZR If raw and unprocessed for human consumption. Also roasted or salted nuts in their shells, however supplied bulk or retail – see also VAT Notice 701/15: animals and animal food
Nuts if shelled and either roasted or salted SR  

3.2 Ingredients and additives used in home cooking and baking

As a general principle, you can zero-rate a product sold for use as an ingredient in home cooking or baking if it:

  • has some measurable nutritional content
  • is used solely or predominantly, in the particular form in which it is supplied, in the manufacture of food; and
  • is not one of the excepted items – see paragraph 2.2

In summary:

Food Item Rate of VAT Notes
Prepared cake, sauce, soup and other mixes ZR For making up in the home kitchen
Mixes for ice-cream and similar frozen products SR See paragraph 3.5
Vegetable oils, maize (corn), rapeseed, groundnut (arachis), olive (including olive oil BP), almond (but not bitter almond oil), sesame seed, sunflower seed, palm kernel, walnut, soya and blends of these ZR Even if they are used as massage or cosmetic oils, provided they are of a type and grade suitable for culinary purposes, and they do not contain any substance, such as perfume, that would make them unsuitable for culinary use
Linseed oil and essential oils SR Not food
Waste and used oil for recycling SR May be eligible for relief as animal feed – see VAT Notice 701/15: animals and animal food
Starch & gelatine ZR Provided they are edible. This does not apply to starch for stiffening shirt collars, or ‘photographic’ gelatine
Salt for culinary use ZR Including fine salt, dendritic salt, and, in retail packs (12.5kg or less) - rock and sea salt
Non-culinary salt SR Including compacted salt (pellets & tablets), granular salt, rock salt (other than retail packs), soiled salt, salt for dishwashers and salt of any type for non-food use
Sweeteners ZR Including natural products like honey & sugar, and artificial products like saccharin, aspartame and sorbitol
Flavourings and flavour enhancers ZR Including natural essences such as peppermint & vanilla, culinary rosewater and synthetic flavourings
Flavouring mixes ZR Including dusting powders, blended seasonings and marinating mixes, whether natural or synthetic
Monosodium glutamate SR Not a food product in its own right
Other food additives such as baking powder, cream of tartar, rennet, lactase & pectin for culinary use ZR  
Non-food additives such as bicarbonate of soda, saltpetre & other single chemicals for use in brining or other processing of meats or fish SR  

3.3 Processed foods

If you supply processed and/or prepared foodstuffs you need to check that they are not standard-rated – see paragraph 2.2. You may also have to decide whether your supplies are in the course of catering and therefore standard-rated – see paragraph 2.1.

In summary:

Food Item Rate of VAT Notes
Canned and frozen food other than ice cream and similar frozen products ZR These have the same liability of the unprocessed product, such as peas or fish
Ice creams, sorbets, frozen yoghurt (designed to be eaten as such) or ice lollies SR See paragraph 3.5
Chilled or frozen ready meals, convenience foods etc ZR For further preparation, such as reheating at home
Cold sandwiches ZR Zero-rated as prepared food unless a supply made in the course of catering when standard rated-see paragraph 2.1

3.4 Bakery products

Although most traditional bakery products, such as bread, biscuits and cakes, are zero-rated, some confectionery is standard-rated including:

  • biscuits wholly or partly covered in chocolate (or some product similar in taste and appearance); and
  • any item of sweetened prepared food, other than cakes and non-chocolate biscuits, which is normally eaten with the fingers

See also paragraph 3.6

Below are some examples of bakery products and their VAT liability:

Zero-Rated Standard-Rated
Bread and bread products such as rolls, baps and pitta bread The same products supplied as part of a hot take-away meal, such as a hot hamburger in a bun, or a hot kebab in a pitta or to “eat in” – see VAT Notice 709/1: catering and take-away food
Cakes including sponges, fruit cakes, meringues, commemorative cakes such as a wedding, anniversary or birthday cakes Cakes supplied in the course of catering – see VAT Notice 709/1: catering and take-away food
Slab gingerbread  
Flapjacks Cereal, muesli and similar sweet tasting bars
Marshmallow teacakes - with a crumb biscuit or cake base topped with a dome of marshmallow coated in either chocolate, sugar strands or coconut

Scottish snowballs - a dome of marshmallow coated with chocolate or coconut, aerated and boiled (not baked), they have a short shelf life and harden rapidly when removed from the packet
Other types of snowballs such as Swedish snowballs with a longer shelf life
“Crunch cakes” - corn flakes or any other breakfast cereal products coated in chocolate or carob and pressed into brittle flat cakes Florentines
Caramel or “millionaire’s” shortcake consisting of a base of shortbread topped with a layer of caramel and (usually) chocolate or carob Shortbread biscuits partly or wholly chocolate-covered
Lebkuchen Coconut ice

3.4.1 Cake Decorations

If you sell inedible cake decorations with a cake, such as silvered horseshoes or bride and groom figures with wedding cakes, you do not have to treat your supply as a mixed supply and account for VAT on the decoration unless it is clearly a separate item in its own right. For example, a toy supplied as decoration to a child’s birthday cake which is clearly intended to be kept and played with after the cake has been eaten. However you may still be able to treat the supply of the cake and the toy as a single supply if the linked goods conditions are met, see paragraph 6.1.

Below are some examples of commonly found products used as cake decorations:

Zero-Rated Standard-Rated
Chocolate couverture, chips, leaves, scrolls etc (designed specifically as cake decorations) Chocolate buttons (except packets of mini-chocolate buttons sold for use in baking.
Jelly shapes, sugar flowers, leaves etc designed specifically as cake decorations Chocolate flakes (except when they are supplied within the bakery and ice cream industries, when they may be zero-rated if sold in packs of one gross or more, clearly labelled “for use as cake decorations only: not for retail sale”)
Hundreds and thousands, vermicelli and sugar strands Any other items which are sold in the same form as confectionery
Royal icing  
Toasted coconut and toasted almonds held out specifically for baking use  
Cherries used in baking (often described as “glacé”)  
Edible cake decorations whether sold as part of a cake or sold separately unless they fall within the exceptions relating to confectionery (see paragraph 3.6) or roasted nuts (see paragraph 3.8) Inedible cake decorations sold on their own

3.4.2 Biscuits

Biscuits covered or partly covered in chocolate or some other products similar in taste and appearance to chocolate are standard-rated.

Below are some examples to help determine whether a product is zero or standard rated:

Zero-Rated Standard-Rated
Chocolate chip biscuits where the chips are either included in the dough or pressed into the surface before baking All wholly or partly coated biscuits including biscuits decorated in a pattern with chocolate or some similar product
Bourbon and other biscuits where the chocolate or similar product forms a sandwich layer between two biscuit halves and is not continued onto the outer surface Chocolate covered shortbread
Jaffa cakes Gingerbread men decorated with chocolate unless this amounts to no more than a couple of dots for eyes
Biscuits coated with caramel or some other product that does not resemble chocolate in taste and appearance Ice cream wafers partly covered in chocolate such as “chocolate oysters”

3.4.3 Hot Food

Many bakery products, particularly bread, pies, pasties and other savouries, are baked on the retail premises, and are sold whilst still hot. The borderline between “freshly baked” and “hot take-away” food can be a difficult one, and if you sell any hot food you are advised to read VAT Notice 709/1: catering and take-away food which sets out the distinction in more detail. If you are still in any doubt contact the VAT: general enquiries helpline.

3.5 Ice cream and similar frozen products

You must standard-rate your supplies of any product designed to be eaten while frozen.

Products which are supplied frozen, but have to be cooked before they can be eaten, or which have to be thawed completely before eating, are zero-rated.

Please see examples below:

Zero-Rated Standard-Rated
Baked Alaska Ice cream and ice lollies
Cream gateaux Ice cream gateaux and cakes, including arctic rolls
Mousse Water ices, sorbets and granitas
Frozen yoghurt which needs to be thawed completely before it can be eaten and which has been frozen purely for storage or distribution Frozen yoghurt
Desserts which are equally suitable for consumption frozen or defrosted (unless primarily designed for eating frozen and made substantially of ice cream or similar products) Powders and mixes for making ice creams and similar frozen products, including incomplete mixes and emulsions used by the trade and fruit syrups sold in plastic tubes for home freezing as ice lollies
Wafers and cones (unless wholly or partly covered in chocolate or a similar product) Wafers and cones sold with ice cream or similar products
Toppings, sauces and syrups unless sold with ice cream or similar products  

3.6 Confectionery

Standard-rated confectionery includes chocolates, sweets and candies, chocolate biscuits and any other “items of sweetened prepared food which is normally eaten with the fingers.” Items of sweetened prepared food do not need to have added sweetening if they are inherently sweet eg certain fruit and cereal bar products.

Here are some examples of standard and zero-rated confectionery:

Zero-Rated Standard-Rated
Cakes including sponge cakes, pastries, eclairs, meringues, flapjacks, lebkuchen, marshmallow teacakes and Scottish snowballs Chocolates, bars of chocolate including those containing nuts, fruit, toffee, or any other ingredients, diabetic chocolate, liqueur chocolates and similar sweets
Chocolate spread, liquid chocolate icing, chocolate couverture, and chocolate chips, strands, vermicelli, mini-buttons etc held out for sale solely for culinary use; chocolate body paint Sweets, pastilles, gums, lollipops, candy floss, sherbet, chewing gum, bubble gum, Turkish delight, marshmallow, fondants and similar confectionery
Biscuits coated with icing, caramel or some other product different in taste and appearance from chocolate Compressed fruit bars and other items of prepared dried fruit confectionery that are sweet to the taste
Chocolate cups Sweetened popcorn
Toffee apples and other apples on a stick covered in chocolate, nuts etc Nuts or fruit with a coating, for example of chocolate, yoghurt or sugar
Ginger preserved in syrup, drained ginger or dusted ginger can be zero-rated as long as it is not held out for sale as confectionery Crystallised, sugared or chocolate covered ginger
Candied peels, angelica, drained cherries for use in home baking often described as “glacé” cherries and cocktail or maraschino cherries Drained, glacé or crystallised fruits including Petha, Marrons glacés
Halva (unless coated with chocolate or chocolate substitute or held out for sale as confectionery) Bars consisting mainly of seeds and sugar or other sweetening matter
Edible cake decorations Cereal bars, whether or not coated with chocolate, with the exception of bars which qualify as cakes
Sweet tasting dried fruit held out for sale as snacking and home baking Sweet tasting dried fruit held out for sale as confectionery/snacking
Traditional Indian and Pakistani delicacies such as barfis, halvas, jelabi, laddoos; and traditional Japanese delicacies Slimmers’ meal replacements in biscuit form that are wholly or partly covered in chocolate or something similar in taste and appearance

3.7 Drinks

Although most drinks (other than medicinal drinks) are considered to fall within the general category of “food” for VAT purposes, many drinks are standard-rated as alcoholic or non-alcoholic beverages. For VAT purposes, a beverage is:

  • a liquid commonly consumed to increase bodily liquid levels, to slake thirst, to fortify or to give pleasure
  • A number of non-alcoholic beverages and related preparations/extracts are, however, specifically allowed zero-rating. These are listed at paragraph 3.7.2

3.7.1 Alcoholic beverages

You must standard-rate all your supplies of drinks containing alcohol, whether you sell them for consumption on or off your premises. Examples include:

  • beer, cider and perry (including black beer and shandy)
  • wine (including made-wine and fermented communion wine); and
  • spirits and liqueurs

This standard-rating only applies to beverages containing alcohol. Other food products containing alcohol follow the normal liability rules, for example:

Zero-Rated Standard-Rated
Fruit preserved in alcohol Liqueur chocolates
Alcoholic dessert jellies Semi-set alcoholic jellies designed to be swallowed as cocktails
Rum babas  

3.7.2 Non-alcoholic beverages

Some non-alcoholic beverages are zero-rated. Here are some examples:

Zero-Rated Standard-Rated
Milk and flavoured milk drinks (including milk shakes) Flavourings for milk shakes (except preparations and extracts of cocoa or coffee, which are zero-rated)
Tea, maté, herbal teas and similar products, and preparations and extracts of these (but this does not include soft drinks containing tea as only one of several ingredients) Purgative and laxative “teas”, such as senna, and similar medicinal teas
Cocoa and drinking chocolate and other preparations and extracts of cocoa Mineral, table and spa waters held out for sale as beverages
Coffee and chicory and other roasted coffee substitutes, and preparations and extracts of these (including coffee extracts for flavouring milk shakes) Alcohol-free beer and wines
Preparations and extracts of meat, yeast, egg or milk Ginger, glucose, honey, peppermint and barley water drinks
  Syrups, crystals, powders and flavourings for making any standard-rated drink
  Carbonated drinks such as lemonade, cola and mixers such as tonic and soda
  Fruit cordials and squashes

All hot beverages and any drinks, including zero-rated drinks sold for consumption on your premises are standard-rated. Cold drinks that are zero-rated in their own right e.g. milk and are supplied for off-premises consumption can be treated as zero-rated. See VAT Notice 709/1: catering and take-away food for supplies made in the course of catering.

3.7.3 Drinks which are not beverages

There are a number of types of drinks which do not fall within the above definition of a beverage. Sports energy and nutrition drinks are specifically standard rated with effect from 1 October 2012 under the VAT Act 1994 schedule 8, Group 1, excepted item 4A. More information about these products can be found in this notice at paragraph 4.6.1.

The following drinks (and the mixes etc for making them) can be zero-rated:

  • plain soya or rice milk (unflavoured and unsweetened)
  • coconut milk
  • meal replacement drinks for slimmers or invalids
  • unfermented fruit juice intended specifically for sacramental purposes (see paragraph 4.7); and
  • Angostura Bitters

3.7.4 Ingredients for home beer and wine making

Products that are canned, bottled, packaged or prepared for use in home wine or beer making are standard-rated. This includes:

  • kits for home brewing, wine making etc
  • retail packs of hopped malt extract, malted barley, roasted barley, hops
  • special wine and brewers’ yeasts
  • grape concentrates; and
  • retail packs of foods, which are specialised to home wine making, such as dried elderberries or sloes for making country wines

You must also standard-rate any general food product that you hold out for sale specifically for home wine making or brewing, such as fresh, dried or canned fruit, fruit juices and concentrates, barley, glucose and plant malt extract. In this context, you hold them out for sale for home brewing and wine making if you:

  • sell them through a retail outlet that specialises in home brewing and wine making materials
  • sell them in the home brewing and wine making department or section of a general outlet; and
  • label, advertise or otherwise display them as materials for home brewing or wine making, or provide with them or on their packaging any brewing or wine making recipes, or instructions for using them in the making of beer or wine (for example, the amount of sugar required for their fermentation or the type of yeast to be used)

3.8 Savoury snacks

3.8.1 General

The following three categories of savoury snack products are standard-rated:

  • potato snacks and similar products, made from potato or from potato flour or potato starch (although a small amount of potato flour in the recipe of a savoury biscuit would not make that biscuit standard-rated if otherwise it had none of the characteristics of a standard-rated potato product)
  • snacks made by the swelling of cereals. This applies only to products produced by the puffing of individual kernels or by an extrusion process where air is introduced under pressure into the cereal flour or starch paste during manufacture to produce an expanded, aerated product
  • roasted and salted nuts

For standard-rating to apply the potato and cereal products must also be packaged and ready to eat without any further preparation by the customer. Packaged means to be pre-packed for retail sale in a sealed bag, carton or other container. Roasted or salted nuts are standard-rated even when sold loose.

Savoury snacks not falling within one or other of these three categories are zero-rated.

See paragraph 6.2 for advice on mixtures containing both standard and zero-rated constituents, for example, Bombay Mix.

The table below gives examples of products and their VAT liability:

Zero-Rated Standard-Rated
Savoury snacks consisting of sliced and dried or roasted vegetables other than potatoes for example beetroot, carrot etc Potato crisps, potato sticks, potato puffs, and similar products including those made from a combination of potato starch or flour and cereal flour.
Tortilla chips, corn chips, bagel chips, cocktail cheese savouries and Twiglets Savoury popcorn (but not corn for popping for example “microwave” popcorn)
Prawn crackers made from tapioca Prawn crackers made from cereals (but not unpackaged prawn crackers, for example, those supplied in unsealed bags as part of a takeaway meal)
Roasted pulses and legumes, for example chick peas and lentils Rice cakes (but not unflavoured rice cakes intended for consumption with cheese or other toppings)
Roasted or salted nuts supplied while still in their shells (such as “monkey nuts” and pistachios), toasted coconut, toasted almonds and other toasted chopped nuts held out for sale in retail packs specifically for home baking All other roasted or salted nuts

4. Specialised products

4.1 General

Dietary products designed to meet particular nutritional needs, either as supplements to a normal diet, or as food for specialised groups of people, such as invalids, slimmers etc, are often sold through specialised health food outlets or chemists’ shops. To determine the liability of these products you must consider whether they fall within the normal and everyday meaning of food – see paragraph 2.3 or are specifically excluded from zero-rating.

4.2 Food supplements

Dietary supplements of a kind not normally purchased and used as food are standard-rated. This includes:

  • vitamin and mineral supplements of all kinds
  • royal jelly products (but not regular food products such as honey which simply have royal jelly added to them)
  • tablets, pills and capsules containing, for example, wheatgerm, iron, calcium, fibre, yeast, garlic, ginseng, pollen, propolis, seaweed, evening primrose, guarana or other similar herbal preparations, and powders of these other than garlic and yeast
  • charcoal biscuits
  • cod liver oil and other fish oils held out for sale as dietary supplements
  • elixirs and tonics, including mixtures of cider vinegar and honey sold as a dietary supplement; and
  • malt extract with cod liver oil (but the supply of plain malt extract with or without added vitamins, is zero-rated unless it is held out for sale for home-brewing etc)

4.3 Invalid foods

These products are often supplied in liquid form or as a powder meant to be made up into a liquid. They include parenteral products, (products given intravenously). Provided the product is designed to meet nutritional needs, and not provide treatment for any medical condition, they can be zero-rated, subject to the normal rules and exceptions. Foods in liquid form, intended to build patients up, are zero-rated as food since they fall outside the definition of a beverage.

4.4 Diabetic and hypoallergenic products

You can also zero-rate specialised food products designed specifically for diabetics or allergy sufferers, such as sugar-free preserves or gluten-free flour and cakes. However, products such as sugar-free confectionery or gluten-free chocolate biscuits, are standard-rated in the same way as their mainstream equivalents.

4.5 Slimmers’ foods

Low calorie foods designed for slimmers are treated in the same way as their mainstream food equivalents. Slimmers’ meal replacement products (including drinks) are always zero-rated except for meal replacements in the form of confectionery such as chocolate or carob-coated biscuits or sweetened cereal or compressed fruit bars.

Appetite suppressants are not food, and must be standard-rated, whether supplied in pill, powder or other form. However, you can zero-rate a genuine slimmers’ food product that contains an appetite suppressant, for example soups containing cellulose, provided that product is still obviously food and is meant to take the place of a “normal” food equivalent in the slimmer’s daily food intake.

4.6 Sports products

There are a wide variety of these products available including drinks, tablets, and bars. The VAT liability of these is as follows:

4.6.1 Sports energy and sports nutrition drinks

From 1 October 2012 Sports drinks that are advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk, and other similar drinks, including (in either case) syrups, concentrates, essences, powders, crystals or other products for the preparation of such drinks are standard- rated. This includes sports nutrition drinks that contain milk or milk extracts such as whey.

4.6.2 Tablets

These are standard-rated, with the exception of glucose, dextrose and Horlicks® tablets, which are zero-rated.

4.6.3 Cereal/fruit bars

Standard-rated items include compressed fruit bars, consisting mainly of fruit and nuts, and also sweet tasting cereal bars, whether or not coated with chocolate, with the exception of bars which qualify as cakes – see paragraph 3.6.

Standard-rating applies to any product falling within the general definition of confectionery even when that product is intended to meet the special nutritional needs of athletes.

4.6.4 Creatine

Items made up wholly or mainly of creatine are standard-rated.

4.7 Food and drink for religious and sacramental use

The existence of religious laws requiring certain foods to be prepared in particular ways (for example, kosher or halal) does not affect the liability of the final product, which is judged according to the normal VAT rules. However, the following liabilities have been agreed in respect of some specialised food products, which have exclusively sacramental use:

  • communion wafers used in the celebration of the Christian Communion, Mass or Eucharist are zero-rated
  • unfermented communion wine is also zero-rated (but fermented communion wine is standard-rated); and
  • unfermented grape juice for use at the Jewish seder or kaddish is zero-rated provided it is marked prominently in English “for sacramental use only”

5. Products used in commercial food manufacture

5.1 Introduction

Many substances used in the preparation of commercially produced foodstuffs would not be used in the domestic kitchen and are not immediately recognisable to the average person as ‘food’. In general:

  • products included for their nutritional content are food, and
  • products that are included for other than strictly nutritional reasons are not food and are standard-rated

5.2 Ingredients

Most ingredients used in commercial food production are the same as those used in home cooking and baking, therefore the rules explained at paragraph 3.2 will apply.

In addition, natural or synthetic flavourings are zero-rated even if they have no measurable nutritional content provided they are essential to the making of that particular food, and they meet the 2nd and 3rd conditions of paragraph 3.2. Edible sausage skins are also zero-rated.

5.3 Additives

Many additives are included in foodstuffs for commercial rather than nutritional reasons, for example, to prolong shelf life or improve appearance. While they may be both necessary and desirable on commercial grounds (and in the case of preservatives, even on health grounds) they are standard-rated if they do not meet the conditions outlined at paragraph 3.2.

The following classes of commercial additives are standard-rated:

  • preservatives including unflavoured wet and dry brine mixes and cures for curing or salting meats
  • anti-oxidants including vitamins A and E
  • vitamin supplements (including those required by law to fortify flour before it can be put on the market)
  • stabilisers and thickening agents (including agar, carageenan, guar gum, gum arabic, gum tragacanth and xanthan gum, but not corn starch)
  • fillers and bulking agents other than flour and starch
  • colourants (other than naturally derived colourings which are also food stuffs in their own right, such as caramel, cocoa, saffron and turmeric, and cochineal)
  • flavour enhancers such as monosodium glutamate (MSG), ribonucleotides and hydrolysed vegetable protein (HVP); and
  • flour improvers and bleaching agents

A few commercial additives that add no nutritional content to the finished product are, however, accepted as zero-rated products because their action makes them essential to the production of a particular foodstuff. These are:

  • food grade, naturally derived emulsifiers and stabilisers, such as lecithin, specifically tailored or mixed for food purposes (such as in margarine) which are essential to the production of that food and cannot be used for any other purpose;
  • artificial sweeteners; and
  • artificial flavourings

6. Mixed supplies: mixtures, promotional linked items and packaging

6.1 Mixed supplies, including linked goods

If you supply standard and zero-rated food items (or zero-rated food items and standard-rated non-food items) together for a single price, this is a mixed supply for VAT purposes. The general rules for the treatment of mixed supplies and the way in which you should account for tax on them is dealt with in VAT Notice 700: the VAT guide.

Examples of mixed supplies are:

  • food hampers
  • special gift or presentation packs containing linked items (like coffee supplied with a mug, tea with a pack of chocolate biscuits)
  • linked goods promotions; and
  • food supplied in or with re-usable storage containers

Where, however, you supply together a minor standard-rated item with a main zero-rated food item you can treat the supply as a single supply of the main zero-rated item where the standard-rated item:

  • is not charged at a separate price
  • costs you no more than 20% of the total cost of the supply; and
  • costs you no more than £1 (excluding VAT)

Once these conditions have been met, the linked goods are treated throughout the rest of the distribution chain as a single zero-rated supply.

If you are not the person who linked the goods - for example, you are a wholesaler or retailer who received them already linked as a package - you may be unsure whether these conditions have been met. In many cases the standard-rated item is so minor that it is obvious, such as where a small plastic spoon is supplied with a yoghurt. In less obvious cases, your supplier’s supporting documentation should tell you whether you can treat the package as a single zero-rated supply or not. If you are in any doubt, you should check the position with your supplier.

There are also special rules for the treatment of mixtures & assortments and packaging, which are covered in paragraph 6.2 and paragraph 6.3.

6.2 Mixtures and assortments

Mixtures and assortments containing both standard-rated and zero-rated items are mixed supplies for VAT purposes. As a general rule you will therefore need to work out the tax value of each part of the mixture or assortment in order to calculate how much tax is due. You will find more about this in VAT Notice 700: the VAT guide.

However, as an exception to the normal rule, certain products containing only small quantities of standard-rated items may be treated as a single zero-rated supply.

The products are:  
1. assortments of biscuits where the weight of standard-rated chocolate biscuits does not exceed 15% of the net weight of the whole;
2. fruit and nut mixes (including Bombay and similar savoury mixes) where the weight of any standard-rated items, such as sweetened fruits, or pieces of chocolate or roasted nuts does not exceed 25% of the net weight of the whole;
3. petits fours in assortments containing standard-rated chocolate biscuits or sweets where the net weight of chocolate biscuits, or the combined net weight of chocolate biscuits and sweets, does not exceed 15% of the net weight of the whole; or the net weight of sweets where sweets are the only standard-rated item does not exceed 25% of the net weight of the whole

These concessions apply only to mixtures and assortments supplied in a single pack, not to “variety” selections of individual packs.

It is unlikely that any mixture or assortment, which does not pass these quantity tests, will meet the cost conditions of paragraph 6.1. However, if it does (if, for example, the standard-rated components of a fruit and nut mix exceed 25% of the total by weight, but still meet the cost conditions in paragraph 6.1) that mix can also be treated as a single zero-rated supply.

6.3 Food packaging

Packaging simply to contain, protect and promote the food it contains, is considered part of the supply of the food inside it, rather than a supply in its own right, and takes the same liability as its contents.

However, if you supply zero-rated foodstuffs in containers, which do more than contain, protect and promote their contents, these containers constitute supplies in their own right. Your supplies are then mixed supplies, and you must account for tax on that part of their price as described in paragraph 6.1 of this notice.

You must treat the following types of containers as separate supplies in their own right and account for tax on them (subject to the “linked goods” concession in paragraph 6.1 of this notice):

  • any container which you specifically advertise or hold out for sale as having value in its own right (for example, by advertising the product as “with free storage tin”)
  • any container with a clear and obviously intended after-use (such as tumblers containing coffee, honey or preserves in ceramic serving bowls)
  • storage jars obviously intended for use in storing future supplies of the product, or other products
  • biscuit tins containing built-in hydroscopic crystals
  • tea caddies (but not simple tins bearing the supplier’s name and details of the weight and variety of the tea they contain, where it is the supplier’s practice to put out their tea in this way)
  • ceramic pâté pots and other ceramic containers in the shape of birds, animals etc, or which are otherwise clearly suitable for future decorative use; and
  • hampers and picnic baskets (other than simple cardboard cartons)

Seasonal packaging is frequently more elaborate than that supplied during the rest of the year (for example, Christmas overwraps or decorated tins in place of, or in addition to, a product’s normal paper or plastic packaging). Such packaging is not considered a separate supply unless it falls within one of the categories listed above.

Your rights and obligations

For an explanation of what you can expect from HMRC and what HMRC expects from you, read Your Charter.

Do you have any comments?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue and Customs
VAT Liability Policy Team
VAT Products and Processes
100 Parliament Street
London
SW1A 2BQ

Please note this address is not for general enquiries.

For your general enquiries please call the VAT general enquiries helpline.

Putting things right

If you’re unhappy with HMRC’s service, please contact the person or office you have been dealing with. They’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

HMRC is a Data Controller under the Data Protection Act 1998. HMRC holds information for the purposes specified in its notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them. HMRC may get information about you from others, or may give information to them. If it does, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds.

HMRC may check information it receives about you with what is already in its records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. HMRC will not give information to anyone outside the organisation unless the law permits it to do so. For more information read the guidance on data protection.