Checked against HMRC's VAT Notice 701/14 (last updated 8 June 2026) on 27 October 2026
The short answer: most food sold in the UK is zero rated for VAT, but a long list of exceptions is standard rated at 20%. Confectionery, crisps, most drinks, ice cream and anything sold as catering all sit on the wrong side of the line. For a food or drink brand, getting one product wrong can quietly cost you a fifth of its price on every sale. And how you describe and market a product can change its VAT rate.
Here are the questions food and drink founders ask most, answered in plain English.
1. Is food VAT free in the UK?
Mostly, yes. Food "of a kind used for human consumption" is zero rated. That means VAT is charged at 0%, but you can still reclaim the VAT on your own costs if you are registered. HMRC's test is whether the average person, knowing what the product is and how it is used, would see it as food or drink.
The law then carves out exceptions that must be charged at the standard rate. The main ones are:
ice cream and similar frozen products
confectionery, apart from cakes and some biscuits
alcoholic drinks
most other drinks, and the syrups, powders and concentrates used to make them
potato crisps, roasted or salted nuts and some other savoury snacks
products for home brewing and wine making
Anything supplied in the course of catering, including hot takeaway food, is standard rated too, whatever the food is.
Find out more about our VAT service.
2. Are cakes and biscuits zero rated?
Cakes are zero rated, and so are plain biscuits. The line is chocolate. A biscuit that is wholly or partly covered in chocolate, or something that looks and tastes like chocolate, is standard rated. A biscuit with chocolate chips baked into the dough stays zero rated, as does a biscuit with chocolate only in a sandwich layer that does not reach the outside.
This is why Jaffa cakes are zero rated (HMRC treats them as cakes) while chocolate covered shortbread is not. Gingerbread men decorated with chocolate are standard rated, unless the chocolate is no more than a couple of dots for eyes.
3. What about cereal bars, flapjacks and snack bars?
This is a common trap. Flapjacks are treated as cakes, so they are zero rated. Sweet tasting cereal bars, compressed fruit bars and bars made mainly of seeds and sugar are treated as confectionery, so they are standard rated, whether or not they are coated in chocolate. Marketing a bar as healthy or as sports nutrition does not change this.
Sports drinks marketed to improve performance, speed up recovery or build bulk are standard rated, including protein shakes made with milk or whey.
4. Are crisps and savoury snacks zero rated?
It depends on what the snack is made from. Potato crisps, potato sticks and similar products made from potato flour or starch are standard rated. So are savoury popcorn, puffed or extruded cereal snacks sold ready to eat, and shelled nuts that have been roasted or salted.
On the other side of the line, vegetable crisps made from anything other than potato (such as beetroot or carrot), tortilla and corn chips, roasted chickpeas and lentils, and nuts still in their shells are zero rated.
5. Which drinks are zero rated?
Fewer than people expect. Most drinks are standard rated, including fruit juice, smoothies, cordials, squashes, fizzy drinks, bottled water and alcohol free beer and wine.
The zero rated exceptions are milk and flavoured milk drinks, tea and herbal teas, coffee, cocoa and drinking chocolate, and plain unsweetened soya or rice milk. Even these become standard rated if you serve them hot, or for drinking on your premises.
6. Are sauces, spices, seasonings and flavourings zero rated?
Generally, yes. Culinary herbs and spices, flavourings (including natural essences such as vanilla and peppermint), blended seasonings, marinades, cooking oils, honey and sugar are all zero rated when sold as food ingredients.
Watch the edges, though. Monosodium glutamate is standard rated because it is not a food in its own right. Essential oils are standard rated. Vitamins, minerals and other dietary supplements sold as capsules, tablets or tonics are standard rated, because they are not food in the everyday sense.
7. Does the way I sell or describe a product change the VAT?
It can, and this is the point many founders miss. HMRC looks at how a product is "held out for sale". For example:
sweet dried fruit sold as a snack or for home baking is zero rated, but the same fruit held out as confectionery is standard rated
preserved ginger is zero rated unless it is sold as confectionery
toasted almonds sold in packs for home baking are zero rated, but roasted nuts sold as a snack are not
fruit and juices labelled or sold for home brewing or wine making are standard rated
Your product name, packaging, website copy and where it sits in a shop can all count as evidence. A rebrand or a new product description is worth a VAT check before it goes live.
8. How do I charge VAT on gift boxes and hampers?
A hamper or gift box that mixes zero rated and standard rated items for one price is a mixed supply. Normally you split the price fairly between the parts and charge VAT on the standard rated share.
There is a useful exception. If a small standard rated item comes with a zero rated food (a spoon with a yoghurt, say), you can treat the whole thing as zero rated if the extra item is not priced separately, costs you no more than 20% of the total cost, and costs you no more than £1 excluding VAT.
Packaging that simply holds and protects food takes the same rate as the food. But a container with an obvious after use, such as a storage tin, a serving bowl, a mug or a hamper basket, is treated as a separate standard rated item.
Find out more about our margin, stock and pricing service.
9. Can I treat a mixed snack pack as zero rated?
Sometimes. HMRC allows a few mixtures to be treated as wholly zero rated if the standard rated part is small. For example, a fruit and nut mix (including Bombay mix) can be zero rated if standard rated items such as sweetened fruit, chocolate pieces or roasted nuts make up no more than 25% of the net weight. For biscuit assortments, chocolate biscuits must be no more than 15% of the net weight. These rules only apply to a mix in a single pack, not to a variety box of separate packs.
10. What if I have been charging the wrong rate?
Fix it as soon as you can. If the net error is £10,000 or less, or up to £50,000 but no more than 1% of your net sales in box 6 of the return, you can usually correct it on your next VAT return. Larger errors, or deliberate ones, must be reported to HMRC separately. You can generally only correct errors going back four years. If the mistake was careless, tell HMRC about it as well as correcting it, because that keeps any penalty lower.
If you have been undercharging, remember that you cannot always go back to your customers for the difference. The VAT is often treated as included in the price you already charged, so it comes out of your margin.
See how our VAT service can help put things right.
What if my product is a genuine grey area?
Some products really are borderline, and the outcome can depend on recipe, size, texture and how the product is eaten. If you are unsure, write down why you think a rate applies before you launch, keep a copy of the HMRC guidance you relied on, and get advice. Where there is genuine uncertainty, HMRC can be asked for a written view on a specific product.
How Kubed Solutions can help
Kubed Solutions is an ICAEW regulated practice and a Xero Advisor Certified firm that specialises in FMCG, food and drink, and ecommerce businesses. Our founder, Gouri Kubair, spent eight years in audit at Deloitte and is an ACA with the ICAEW. She also built Holy Lama Naturals, an award winning food and body care brand, so she has worked through product by product VAT decisions as a founder, not just as an adviser.
We can review your range line by line, check your shop and accounting software apply the right rate to each product, and help put things right if something has slipped through.
Book a free 30 minute consultation to talk it through.
Official guidance: Food products (VAT Notice 701/14), Catering and takeaway food (VAT Notice 709/1) and How to correct VAT errors (VAT Notice 700/45).
This article is general information, not advice for your specific circumstances. VAT liability can turn on fine detail, so please check the linked HMRC guidance or speak to us before acting.