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HMRC internal manual

VAT Food

Items benefiting from the relief: what is food?: food packaging: the linked goods concession

Food and its associated packaging may be treated under the linked goods concession described in Notice 700/7, Business Promotion Schemes. This means that if packaging is more than normal and necessary, it may nevertheless be treated as zero-rated if it:

  • is not charged at a separate price; and
  • costs the supplier no more than 20% of the total cost of the combined supply and is worth no more than:
  1. £1 (excluding VAT) if included with goods intended for retail sale; or
  2. £5 (excluding VAT) otherwise.

The linked goods concession generally allows small items included with packaging, such as plastic spoons supplied with yoghurt, to be treated as a single supply with the food. For packaging which appears more extensive than the basic examples given in this section, however, the value criteria in the concession are usually exceeded: so when examining such packaging you must consider whether it can be accepted as normal and necessary for the product concerned.