High street bakers, including Newcastle-based Gregg's, have welcomed a government u-turn on plans for a 'pasty tax'. Hot baked snacks will now not automatically attract 20% VAT.
Our Business Correspondent Ben Chapman reports.
The government has defended its decision to reverse plans which would have seen VAT imposed on hot takeway pasties and sausage rolls.
After a strong campaign, led by Greggs, ministers now say that no VAT will be imposed on prebaked hot products which are allowed to cool naturally. But for the first time VAT will be charged on hot rotisserie chickens bought in supermarkets.
Shares in the Newcastle-based baking giant Greggs rose by 6% this morning after the Government climb down on 'pasty tax'.
Ministers have decided to reverse plans to charge VAT on hot baked goods such as pasties, pies and sausage rolls.
Shares in the firm had fallen by 15% in the wake of the announcement in the Chancellor's Budget in March.