Greggs is slashing prices due to VAT cut
GREGGS is slashing the price of hot drinks as it passes on a VAT cut to customers.
It is also cutting the price of sausage rolls and pasties - but only if you order them for delivery, due to a quirk in the way VAT works.
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Most food served to be eaten in store incurs VAT, as do hot takeaways. Cold takeaways, however, are VAT-free.
Greggs' sausage rolls and pasties purchased from shops are not kept heated, so while you may occasionally get one fresh from the oven, these are all VAT-free.
But Greggs' sausage rolls and pasties ordered for home delivery are kept warm, which means it pays VAT on them.
Greggs doesn't keep pasties and sausages rolls hot in stores in order to keep prices low.
Which menu items is Greggs' cutting prices on?
HERE are some examples of which menu items Greggs will cut prices on as a result of the VAT cuts.
Picking-up takeaways in store
- Latte
- Cappuccino
- White coffee
- Black coffee
- Flat white
- Tea
- Hot chocolate
- Mocha
Ordering takeaways for home delivery
- Hot drinks as listed above
- Sausage rolls
- Vegan sausage rolls
- Steak bake
- Vegan steak bake
- Cheese and onion bake
- Chicken bake
This means you won't see cheaper prices in restaurants but the cost of getting them delivered will drop.
When The Sun checked home delivery prices from Greggs' Walworth branch in London, we found the price of sausage rolls had been cut by 15p (12.5 per cent) from £1.20 to £1.05.
Meanwhile, a steak bake had fallen in price by 25p (13.5 per cent) from £1.85 to £1.60.
But a cold honey roast ham salad baguette for home delivery remains the same price at £3.40.
The government considered shaking up these rules back in 2012 under what was dubbed the "pasty tax" to start applying 20 per cent VAT to fresh items that were often purchased warm.
Which restaurants and hotels will pass on VAT cuts?
HERE are the major businesses that have so far confirmed they'll pass on VAT cuts to consumer:
- Accor Hotels - , , ,
- Bourne Leisure - , ,
But it ultimately U-turned on the proposed hike after petitions from Greggs and other pasty makers.
Greggs does normally sell hot food directly from stores, such as wedges and soup, but all hot food items are currently off the menu while it gets back up and running following lockdown.
The bakery chain's seating areas are also currently closed, despite the government allowing these to reopen from July 4 in England.
In addition, the price of sweet treats at Greggs will remain the same as most traditional bakery products, such as bread, biscuits and cakes, are zero VAT rated anyway.
Exceptions to this rule include cereal bars, florentines, shortbread biscuits partly or wholly covered in chocolate, coconut ice, and bread served as part of a hot takeaway.
Full list of businesses where VAT will be cut
THE VAT rate will be slashed for the hospitality and tourism industries in order to help them bounce back from the coronavirus crisis.
- Restaurants, cafes and pubs
- Hotels, inns, boarding houses and similar establishments
- Holiday and caravan parks and other holiday accommodation businesses charging fees for tent pitches or camping facilities
- Shows
- Theatres
- Circuses
- Fairs
- Amusement parks
- Concerts
- Museums
- Zoos
- Cinemas
- Exhibitions
- Similar cultural events and facilities
Today's price cuts come as VAT is slashed from 20 per cent to 5 per cent for businesses in the hospitality and tourism industries across the UK under measures first announced in chancellor Rishi Sunak's mini-Budget last week.
It's hoped firms will pass on these savings to customers but they're not obliged to do so.
KFC, McDonald's and Wetherspoons are among the other high street chains to pass on VAT savings to customers today.
more on greggs
A Greggs spokesperson said: “The vast majority of our products are zero-rated for VAT but on those individual lines which are subject to the standard rate we intend to pass the full reduction benefit directly onto our customers.”
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Cuts to VAT come alongside the government's new Eat Out to Help Out scheme, which is offering additional savings of up to £10 a head on meals out during August.
Harvester and Pizza Hut are among the firms to sign up for this separate scheme.