Consumer Editor Emma McKinney reveals canny tricks to beat the VAT rise when it comes to buying groceries – and tests out supermarket price promises.
EVER felt a little too lazy to microwave your own popcorn and opted for the ready-made stuff instead?
Well here’s an incentive to do it yourself – microwave popcorn could cost you a quarter of the price of its pre-prepared counterpart, thanks to a bizarre quirk in the way VAT has been added to a host of groceries.
Consumer experts claim shoppers could adopt some clever tactics to avoid being hit in the pocket when it comes to the Government’s hike in VAT last January from 17.5 per cent to 20 per cent.
Dalia Mays, spokeswoman for independent online price comparison website www.mysupermarket.co.uk, says: “Although a lot of staple food is exempt from VAT, it is payable on grocery items such as snacks, drinks and confectionery – leaving the average shopper paying an extra £33 a year for their supermarket shop and £66 a year more compared to 2009, when VAT was temporarily reduced to 15 per cent.
“Fortunately for the shopping-savvy, there are ways you can beat the tax rise. That’s because VAT is a tax of complications and anomalies, and it’s possible to cut it out of a substantial part of your shopping basket. If you know what is and is not subject to VAT then you’ll be able to adjust your shopping accordingly.”
VAT law is supposed to split your supermarket shop between two categories – essential foods, which are zero-rated so that you don’t pay any tax, and luxury foods that are subject to a 20 per cent tax.
However, because of the difficulty of deciding what constitutes a luxury item, it’s possible to buy very similar products at 20 per cent less than others because they are VAT-free.
Dalia adds: “There are some strange discrepancies between the types of foods that qualify for VAT.
“By making some smart decisions consumers can avoid paying VAT on a lot of convenience foods. For instance, a gingerbread man decorated with two chocolate eyes is exempt from VAT, but if it contains any more chocolate 20 per cent VAT is charged.”
Other top tips for those wanting to avoid the tax rise include buying wheat-based snacks or tortilla chips instead of potato crisps, or swap shelled salted nuts, which are liable for VAT, to unshelled salted nuts like monkey nuts and pistachios, which aren’t. Those with a sweet tooth could save money by buying VAT-free cream cakes, avoiding taxed frozen Arctic rolls.
Daniel Lyons, VAT partner at accountancy firm Deloitte, says the full list of zero and standard-rated food and drink products is “mind-boggling” but worth checking out at HM Revenue & Customs at www.hmrc.gov.uk
“VAT law is like French irregular verbs because there are so many exceptions,” he adds. “It used to look fairly sensible 30 years ago, but economics have changed and new products have come on the market.” The VAT rise has fuelled the war between supermarkets claiming to offer the cheapest prices.
