The five weirdest things you'll pay VAT on

Wednesday's Budget included a few surprises - not least for the nation's hot food vendors, self-storage operators and sports nutrition drink makers.

by Emma Haslett
Last Updated: 06 Nov 2012
When it came to delivering his big speech on Wednesday, it must have been a bit of an anti-climax for George Osborne: after all, most of the things the Chancellor said had already been leaked.

But there were one or two surprises – most notably among the new items that will be subject to VAT. Think your wallet’s feeling a little empty? If you’re into caravans, sports nutrition, takeaways – or all three – things are about to get a lot worse…

1. The takeaway tax

Kiss goodbye to your pennies if you’re a fan of steaming sausage rolls or piping hot pasties: the Chancellor closed a loophole which meant that all food that’s ‘hotter than the surrounding air’ when it’s bought at the till will be subject to 20% VAT. While McDonalds, Pizza Hut etc were already subject to the charge, the new rules will add 18p to a 90p sausage roll at Greggs, and 30p to a pasty. It’ll even mean the price of the rotisserie chicken you buy at the supermarket will go up.  So devastating was the move that share prices for the nation’s favourite bakery dropped by 5% on Thursday, wiping £30m off its value.

The slightly bizarre effect, though, is that cold sausage rolls or pasties won’t be subject to the tax. Expect the nation’s microwaves to take a thorough bashing from now on…

2. VAT on vanity

Haircuts will get a lot more expensive, after the Chancellor decided to pass on VAT to hairdressers who rent a chair in a salon as well as to those who own the joint. Mark Coray, president of the National Hairdresser’s Federation, wasn’t impressed. ‘It’s not just the unfairness of how VAT is taxed on different goods and services that is an issue but how VAT is structured, particularly in relation to small, labour-intensive businesses such as hairdressing salons,’ he said.  

In fact, so incensed has the NHF been about VAT on hairdressing in general that back in January 2011, it launched its ‘Cut and Dried?’ campaign, asking for labour-intensive industries and sole traders to be given a VAT rate cut, from 20% to 10%.

3. Caravan charge

Even the beloved holiday homes of the nation’s 1.5m caravanners came under fire. This is a bit of a complex one: although most caravans are already subject to VAT, some larger ‘touring caravans’ aren’t.

The problem, Nigel Donnelly, editor in chief of Practical Caravan magazine (one of MT’s sister titles), told us, is that many caravans of that size are designed, built and sold in the UK – so although the Treasury reckons it can raise an extra £45m over five years, it’ll be at a cost to jobs. ‘Raising the cost of entry to a market which is already struggling to find customers is hardly going to help,’ said Donnelly. ‘It is regrettable the changes are taking place when manufacturers are struggling to keep the factories ticking over.’

Looks like we’ll be spending our holidays under canvas for the foreseeable future, then…

4. An imposition on sports nutrition

Jody Marsh may be an unlikely victim of the Treasury’s posturing, but the bodybuilding former glamour model may have to forego her protein shakes in future. The Chancellor said VAT would be added to the kinds of powdered sports nutrition drinks athletes use to stock up on their protein. Just in time for the Olympics, too.

5. The self-storage stipend

Self storage firms will have to add VAT to their service charges – so any mafia dons storing bodies will now have to pay a bit extra. Rodney Walker, CEO of the Self Storage Association, told MT the move was a ‘surprise’, but stopped short of criticising it, saying the Association is ‘currently gathering our thoughts together about what we need to do next’.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Leadership lessons from Jürgen Klopp

The Liverpool manager exemplifies ‘the long win’, based not on results but on clarity of...

How to get a grip on stress

Once a zebra escapes the lion's jaws, it goes back to grazing peacefully. There's a...

A leadership thought: Treat your colleagues like customers

One minute briefing: Create a platform where others can see their success, says AVEVA CEO...

The ignominious death of Gordon Gekko

Profit at all costs is a defunct philosophy, and purpose a corporate superpower, argues this...

Gender bias is kept alive by those who think it is dead

Research: Greater representation of women does not automatically lead to equal treatment.

What I learned leading a Syrian bank through a civil war

Louai Al Roumani was CFO of Syria's largest private retail bank when the conflict broke...