But shop savvily and you can still avoid VAT in some areas — when buying clothes, holidays and presents, for example. But start with a VAT-free lunch — by making it yourself…
Make your own lunch
You don’t pay VAT on ingredients like bread, salad vegetables, fruit or cheese but it is charged on food bought in restaurants and hot sandwiches. Likewise, bottled smoothies are VAT-payable but raw fruit that you blend yourself are not. Think about the snacks you buy too: sponge cakes, fruit cakes, meringues, and wedding, anniversary or birthday cakes are all VAT-free, whilst chocolate-covered biscuits do face the 20 per cent tax. Be very wary of gingerbread men too! They don’t face VAT if the man has only two chocolate blobs for eyes, but if it has chocolatey legs or buttons on too then it’s a VAT victim.
Staycation in Britain and your hotel bill, car hire, and attraction tickets will all face VAT. But most overseas package holidays are VAT-free. You will be likely to face local taxes though.
Pick presents carefully
Buy a friend a birthday present of a necklace or gadget and you’ll likely face VAT. But opt for a book or magazine subscription and it’s VAT-free. Use Tesco Clubcard vouchers to buy a magazine subscription and you can swap £16-worth of vouchers for a year’s subscription to magazines including Cosmopolitan and FHM.
Drink hot not cold
Cans of cold drinks like lemonade or fruit juice all face VAT, but tea, coffee, hot chocolate, milk and milk shakes are VAT-free.
Buy kids’ clothes and shoes
If you’ve got small feet or are slender, see if you can squeeze into kids’ clothes or shoes - it’s VAT free. Buy these as gifts for children too, as toys face VAT. It might not make you popular, but will leave more cash in your pocket.