Zero-rated for VAT

In the UK there are three VAT (Value Added Tax) rates. The standard rate is currently 20% and applies to most goods and services. A reduced rate of 5% is payable on items such as children's car seats and gas and electricity for your home, and there is a zero rate too.

I've look at the products and services that are VAT-free in the UK and here what I found out:

Items that are zero-rated for VAT

Baby wear, children’s clothing and children’s footwear

Books, newspapers and magazines

Printed or copied music

Caravans (depending on their size)

Water supplied to homes

Donated goods sold in charity shops

Goods and services that are exempt from VAT

Betting and gaming

Bingo and lotteries

Physical education and sports activities

Burial or cremation of dead people, or burial at sea

Funeral plans written under contract of insurance

Medical treatment and health care

Postage stamps (UK and Isle of Man)

Financial services such as loans and other forms of credit

Insurance services 

(Courtesy of Which?)

When looking for deals and offers, I've realised that I should start checking my usual grocery shopping list which I might find an alternative items that are zero-rated VAT. Though I still have to pay for some products with VAT, at least I'll still make savings on some of it.

I found this shopping list comparison (Courtesy of The Telegraph) that might be useful when doing your grocery shopping.

VAT Shopping List

- Takeaway hot food £1.09

- Cereal bars £1.98

- Partly or wholly chocolate-covered shortbread £1.59

- Crystallised ginger £2.04

- Raisins packaged for snacks 70p

- Squash £1.09

- Potato crisps £1.69

- Ready-made popcorn £2.60

- Prawn crackers made from cereals £1.48

- Shelled roasted or salted nuts £1.15 for 100g

- Ice cream and ice lollies £3.99

- Chocolate-coated biscuits £1.25

- Gingerbread men with chocolate decorations 99p

Total: £21.64

Non-VAT shopping list

- Freshly baked food £1

- Flapjacks 73p

- Millionaires Shortbread (with caramel layer) £1.19

- Ginger in syrup £1.85

- Raisins packaged for baking 18p

- Milkshake and flavoured milk drinks 85p

- Crisps made of other vegetables and wheat-based snacks such as tortilla chips 89p

- Microwave popcorn £1.99

- Prawn crackers made from tapioca £1.62

- Roasted or salted nuts still in shells or packaged for home baking 65p for £100g

- Frozen ready meals and baked Alaska £2.97

- Chocolate chip biscuits 49p

- Gingerbread men with a few dots of chocolate for eyes 65p

Total: £15.06

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