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HMRC internal manual

VAT Food

Items benefiting from the relief: seeds and plants: seeds

Where supplies are basically of seeds, falling within item 3, rather than of a full plant-growing kit, zero-rating of the entire supply is appropriate. Examples are

  • where the standard-rated element, such as fertiliser, supplied with the zero-rated seeds, accounts for less than 10% of the total cost; or
  • where the supply consists merely of a planting medium which has been impregnated with zero-rated seeds and serves essentially as a means of simplifying the planting and germination of plants, for example peat cubes of less than 125 cc containing seeds, or thin layers of tissue incorporating seeds.

Seeds sold as pet food

Seeds such as canary seed, millet seed and sunflower seeds, which are not held out for sale as pet food or packaged as wild bird food are zero-rated.

Seeds that undergo a treatment or process

Since 1st January 1996, the application of a treatment or process to another person’s goods (so as to produce new goods) is a supply of services, the liability of which follows that of the resulting goods. This change in the law does not affect the liability of the end product: it only affects whether the treatment or process is a supply of goods (pre 1st January 1996) or a supply of services. Paragraph 2 of Schedule 4, that provided for the treatment or process to be a supply of goods, has now been omitted, but still applies to supplies made before 1st January 1996.

The drying, cleaning and dressing of zero-rated seeds is now regarded as a zero-rated supply of services. The rolling and grinding of the same seed is also zero-rated. The supply of seeds coated with insecticides and/or fertiliser is a single supply (the supply being essentially one of seeds) and follows the liability of the particular seed.

The drying of grain only is not a treatment or a process producing new goods and is therefore a standard-rated supply of services.