UK Government U-turn on Cornish pasty tax & charitable donations
Cornish pasties and caravans
The government is to reverse its plans to impose VAT on Cornish pasties, the BBC has learned.
Ministers have also reduced the intended 20% charge which was due to be levied on static caravans to 5%.
The U-turn from Chancellor George Osborne's Budget follows a large-scale protest by bakers and caravanning enthusiasts.
The government has altered the definition of what is a "hot" pasty to allow the reversal of its plans.
After the amendment, food such as sausage rolls or pasties sold on shelves - that is, cooling down, rather than being kept hot in a special cabinet - will not be liable for VAT, BBC political editor Nick Robinson says.
During a parliamentary debate last week, MPs from all three main parties criticised Mr Osborne's proposals, arguing they were unenforceable and would have an adverse impact on jobs and businesses.
Currently, VAT is not charged on most food and drink, or hot baked goods, but is payable on takeaway food sold to be eaten hot.
However, hot savouries including pasties and pies are exempt. The U-turn would effectively maintain this situation.
Static caravans do not currently incur VAT.
Responding to the Government’s announcement that they are exempting charitable donations from the cap on tax relief, John Low, Chief Executive of the Charities Aid Foundation, said:
“We are delighted that the Government has responded to the challenging calls from philanthropists and charities across the country and taken the bold decision to exempt charitable donations from the cap on tax relief.
Shadow Chancellor Ed Balls said: "Another day, another Budget tax U-turn - three successive U-turns in four days - all when Parliament is not sitting and just a few weeks after ministers were defending these measures, show just what an embarrassing shambles George Osborne's Budget has become."