Glyn Edwards VAT Director at MHA says
“Given our Chancellor is facing increasing challenges with her upcoming Budget in finding taxes to raise we have three palatable and not so palatable ideas for her
First get rid of the decades old famous anomaly that allows Cakes to be exempt from VAT. It’s recently been estimated that the UK consumes about £3.2bn worth of cake each year so that would raise £640 million for the Exchequer – assuming cake consumption holds up and we don’t all start eating carrots instead.
Secondly the fast food market in the UK was valued at £13.4bn in 2022 and estimated to rise to £17bn by 2026. VAT is already charged on hot food delivery at the standard rate (although not ice cream). Raising the 20% rate to 25% would presumably encourage a more healthy lifestyle and raise £850m in extra revenues for the Treasury.
So, combining one and two would actually raise more money than the controversial VAT on private school fees which according to the IFS is between £1.3b and £1.5bn
Finally, Caviar has always been exempt from VAT. Assuming all the Caviar consumers haven’t already fled the country over concerns about other punitive measures being introduced in the Budget this is surely a product that the Chancellor should be looking to introduce VAT on. There are no reliable figures on the size of the UK market but Fortnum and Mason advertise a 500g tin of Beluga caviar for £3500. VAT would add £700 to the price but surely this would fit in with Labour’s idea of ‘the broadest shoulders bearing a bigger burden’.”
