Supermarket

Get informed

Although a lot of foods are zero rated from VAT, many are not and it is not always obvious which are which. As a rule of thumb though, most staple and fresh foods are zero rated, while the tax is levied on items that are considered a ‘luxury’ such as snacks, drinks and confectionery. Therefore, households which rely on convenience foods will be hardest hit. There is a full list of zero and standard rated food and drink on the HM Revenues and Customs website at http:customs.hmrc.gov.uk - and if you have the patience it is could be worth going through it with your usual list before venturing to the shops.

Start swapping

Thanks to the numerous discrepancies in the VAT regime, even if your favourite product is liable for the tax, there is usually something quite similar, which is not. Saving money is simply a question of getting into the habit of replacing one product with another. So, for example, listed below are two shopping baskets, one which is subject to VAT and the other which is not. The products in the opposing columns are quite similar and swapping from one to another could save you a few pounds every week, which will add up nicely over the year.

VAT items

Arctic rolls

Chocolate-coated biscuits

Flavouring for milk shake

Nuts or fruit covered in chocolate or yoghurt

Popcorn (ready made)

Potato crisps

Shelled roasted or salted nuts

Sorbet

Sweetened dried fruit for confectionery

Snacking, such as raisins

Non-VAT items

Cream gateaux

Chocolate chip cookies

Milkshake

Toffee apples

Microwave popcorn

Tortilla chips

Roasted or salted nuts in their shells

Mousse

Sweetened dried fruit for snacking

Home baking, such as raisins

Plan ahead

Don’t forget too, that many other items from petrol and cars, to clothes and white and electronic goods will also be getting more expensive from January 4. If you are planning a big purchase, but are still weighing up the options, it is a good idea to bring your plans forward to beat the price hike.

Written by Teena Lyons, this article was first published on October 14, 2010. Teena's opinions are her own and for general information only. Always seek independent, professional, financial advice.