The monthly online
magazine for all
catering professionals
Essentially Catering Magazine

Catering news - For this month's news - View magazine »

Getting to grips with Pasty Tax

Getting to grips with Pasty Tax

On 1 October the controversial ‘Pasty Tax’ came into force. Many remain unsure which items now attract VAT under the new law.

Greg Mayne, director of Indirect Tax Services at accountancy firm Reeves explains: “There are five tests for traders to apply to know whether they are liable for the tax, which applies to anyone selling hot food for eating off their premises.”

Has the food been:

  • Heated in order to be eaten hot?
  • Heated to order?
  • Kept hot after being heated?
  • Provided in a packaging that retains heat?
  • Marketed to indicate that it is supplied hot?

“There are no ways around VAT if the answer is ‘yes’ to any of these questions. A key issue is whether the product, or part of it, is hot – which is defined as above surrounding air temperature – at the time it is given to the customer.

“But there is no VAT on products, such as bread, that may be sold warm simply because they have just been baked. This is because Government limited the planned scope of the VAT extension following widespread opposition from the baking industry. Food such as sausage rolls or pasties sold on shelves, but not being kept hot in a special cabinet, will remain not liable for VAT.”

Shirley Smith, corporate partner at Reeves and head of Hospitality and Leisure Services, comments: “Her Majesty’s Revenue and Customs (HMRC) recently announced new task forces to tackle what they call tax cheats. They expect to recover more than £19.5 million by targeting, amongst others, those who do not pay the right amount of tax in restaurants in the South East and Solent areas.

“Therefore it is important to understand the impact of the ‘pasty tax’ on your business to ensure you correctly account for this VAT. The HMRC task force teams will visit traders to examine their records and carry out other investigations, which have been known to include ‘test eating’ by visiting restaurants posing as customers.”

The message to traders, whether they are selling pasties from a shop or hot chestnuts from a stall, is clearly ‘don’t bury your head in the sand’ and ignore the VAT – this is not going to go away.

For more free tax advice visit

Your feedback is important to us – please comment any time. Leave feedback »

Previous issues - For latest news & articles view this month's magazine »

Inside this issue

Sign up for more

Sign up today and get Essentially
Catering Magazine delivered every
month to your inbox.

You’ll also get:

  • Weekly news updates
  • Exclusive catering product offers
Sign up »
Advertisement BB Foodservice
Follow Essentially Catering Magazine on Twitter

Essentially Catering @MagazineEC 19 MAY

RT @ChefGruel: When the shutdown ends, I’m inviting everyone who retweets this to my chicken concept Two Birds. Double birds on me. https:/…

Essentially Catering @MagazineEC 28 APR

NEWS!! After 13 years EC magazine is closing on the 30th April, it’s a decision from the top, nothing to do with CO…

Follow Essentially Catering Magazine on Facebook

Article Archive

Mental Health

Christmas may be heralded as a time for customers to be jolly and let their hair down, but the extra pressure on hospitality workers can take its toll. This year has witnessed an unprecedented amount of media attention being given to mental health. Read more >


Back in the day, the availability of cocktails out of home was very much limited to eponymous bars where your drinks were served by expert mixologists with a flair for spinning and twirling bottles as they created their offer. Read more >

View previous articles > 191
Advertisement Cooking oil offer