Chocolate Week 2019

During Chocolate Week , if you are trying to save money, you may want to think about your shopping basket and what items in it actually contain VAT.

No VAT is charged on plain biscuits or cakes. But when a biscuit is covered in chocolate it becomes a luxury and standard rate VAT at 20% is added to the price. Mcvities, the market leaders for Jaffa Cakes added chocolate to the cake and tangy orange base, so classifying them as cakes, not biscuits.

Jaffa cakes – cake or biscuit?

No VAT is charged on plain biscuits or cakes. But when a biscuit is covered in chocolate it becomes a luxury and standard rate VAT at 20% is added to the price. Mcvities, the market leaders for Jaffa Cakes added chocolate to the cake and tangy orange base, so classifying them as cakes, not biscuits. Although the taxman challenged this, claiming chocolate biscuit status,  the court ruled in favour of McVities and we don’t have to pay VAT on our Jaffa Cakes.

Chocolate chip, chocolate digestive or bourbon?

Chocolate chip biscuits where the chips are included in the dough or pressed into the surface before baking are zero-rated. Bourbon and other biscuits with a chocolate sandwich layer between two halves also escape VAT. However, if your biscuit is wholly or partly coated in chocolate then VAT will be added at the standard rate.

Gingerbread men – don’t overdress

Unfortunately, in the biscuit world, not all Gingerbread men are born equal. No VAT is charged for gingerbread with just two chocolate spots for eyes. However, if your gingerbread man is dressed with any chocolate-based additions, such as trousers, 20% VAT will be added.

Anita Monteith adds: “These examples emphasise how complicated the UK tax system can be. It may be only biscuits, but rules like these apply to a number of day to day household goods.”