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.
Hundreds of Bakers throughout the UK headed to Downing street to protest against the 'pasty tax'. Watch Gerry Foley's reports on the latest events.
Ian Swales talks to our Political Corespondent on why he went against the majority. He said ministers needed to do further work to clarify exactly how the ‘hot’ pasty rule would work in individual stores.
Despite a small rebellion by coalition MPs, including the Redcar Lib Dem Ian Swales, the government had a majority of 35 . Next week Greggs, the Tyneside based chain, are expected to deliver a giant petition to Downing street calling on the government to look again at the proposal.