Victory for bakers after 'pasty tax' U-turn

One of the North East's biggest and successful firms in celebrating victory in the row over the 'pasty tax'.

Gregg's today welcomed a government climb down on proposals that would have seen 20% VAT applied to hot baked snacks such as pies and sausage rolls. In the two months since it was announced in the Budget, the company has argued the food it sells isn't really hot.

Today, after winning the argument, its share price, which has suffered in recent weeks, jumped by 8%.

How the new tax will work

  • Food advertised as 'Hot' or cooked to order, such as toasted sandwiches, will be taxed at 20%
  • Anything cooked then kept warm, under hot lamps or special packaging, will also attract VAT
  • Baked goods that are cooked then left to cool naturally will remain VAT-free, no matter what temperature they're served at
Campaigners attracted three hundred thousand signatures to a petition against the 'pasty tax'. Credit: ITV

"The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency... After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply."

– Treasury spokesman

But Labour has criticised the u-turn, describing the government as a "shambles".

There was also a change to plans to introduce 20% VAT on static caravans. The rate will now be 5%. Caravan park operators, who feared the tax would cripple an already struggling industry, have given a cautious welcome to the news.

"It's fantastic the government have listened, taken on board our comments, extended the period to talk about things. They've been seen to do something with us but it's not over yet. This still could cost jobs."

– Duncan McCready, D&M Leisure Parks