If you were buying coffee beans, ground coffee, or instant coffee to prepare drinks at home then they're zero-rated. Meanwhile, if you've bought a coffee to enjoy at a restaurant, cafe or pub there is VAT on coffee and the standard rate applies. Most soft drinks (excluding milk) are subject to standard-rated VAT.
Coffee purchased, as a hot drink, from a café, restaurant or similar establishment, is subject to VAT at the standard rate of 20%. Whether the coffee is consumed on the premises or taken away does not affect the VAT treatment. In the same way, VAT is charged on hot coffee purchased from takeaways/street vendors.
Syrups and similar which are designed only to flavour beverages such as coffee, tea or alcoholic drinks fall into the second category and are zero-rated.
VAT For Small Businesses - Tips and Advice (VAT Series: Video 4)
Is there VAT on tea bags?
Food and drink normally chargeable to VAT at the zero rate. Tea, coffee and cocoa in drinkable form. all kinds of chocolates, sweets and similar confectionery. Products normally chargeable to VAT at the reduced rate, such as biscuits, cakes, crackers and wafers, when supplied in the course of a meal.
Cold takeaway food and drink is zero-rated unless it is a product which is always standard rated, for example, potato crisps, chocolate, and cold beverages such as cans of pop and bottled water.
However, for some items the standard VAT rate will apply. These include food and drink supplied by the catering industry, alcoholic drinks, confectionery, crisps, savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water.
In a nutshell restaurants must always charge VAT on everything except food that is cold and taken away, takeaway vendors do not need to charge VAT unless the food is hot and/or the customer would like to eat in perhaps a designated sitting area.
This means that they are not subject to VAT and therefore, do not incur the standard 20% VAT charge. Exempt goods and services include insurance, education, and health services. However, any VAT incurred on the provider's costs in connection with these supplies cannot be reclaimed from HMRC.
Condiments and seasonings such as mustard, pepper, pickles, sauces, horseradish, vinegar, and salad oils, commonly added to food to make it more palatable, are zero-rated.
Most food items that farmers produce – milk, livestock, eggs and crops – are zero-rated for VAT, which means that it is not charged on them, but the farmer is still entitled to reclaim VAT on the cost of producing those goods.
Some items are accepted as being zero-rated. For example, cream gateaux, mousse and other desserts that are suitable for consumption either frozen or thawed are zero-rated, as is yoghurt that is frozen for storage and is thawed prior to being eaten.
The Government established a 0% VAT rate for 211 goods, including medical equipment, soap, antibacterial gel, laundry detergent, some cleaners, special masks, gloves for surgery, nebulizers, vital sign monitors, portable x-ray machines and hospital beds.
You must account for VAT on: Any supplies of catering or hot take-away food. You can reclaim any VAT charged to you under the normal rules. Sales of other standard rated items of food.
VAT on bakery items as cakes or biscuits. Even though most traditional bakery products, such as biscuits, bread, and cakes, are zero-rated i.e. no VAT is charged, some confectionery items are standard-rated comprising: Biscuits completely or partially covered in chocolate (or a similar product in appearance and taste.
For example, most cold drinks are standard-rated, but HMRC specifies that takeaway iced coffee, iced tea, and milkshakes are zero-rated (though ice cream, which many milkshakes contain, isn't). Similarly, certain cakes and desserts are zero-rated, as are vegetable-based snacks.
Sweetened popcorn is standard-rated as confectionery. Savoury popcorn is also standard- rated, but under excepted item 5 (crisps and other snack products). Corn for popping (whether by the conventional method or by microwaving) is zero-rated since it does not fall within any of the excepted items.
In the eyes of UK law, biscuits and cakes are necessities and are zero rated. However, chocolate-covered biscuits are regarded as a luxury, which means the full rate of VAT is payable.
Value Added Tax is currently charged by HM Treasury on the sale of toilet rolls at the rate of 20%. I believe that this should be abolished as they are not "non-essential, luxury items" and are an essential item as are female hygeine products which are rated at 5%.
Sugars form one of the three major groups of carbohydrates in food and (together with starches) are the main sources of food energy. The main sugars used in food manufacture are sucrose, fructose, glucose, lactose and maltose. All are zero-rated.
