Is there VAT on Protein Snacks?
The inconsistencies of the UK VAT system mean that applying VAT to protein snacks can be far from straight forward.
For example, a chocolate enrobed protein bar is classed as an item of confectionery and therefore has VAT at 20%, whereby a chocolate enrobed protein cake bar is classed as cake and is zero-rated for VAT. Both in essence are prepacked protein snacks that could contain exactly the same nutritional profile, but to the consumer, one is 20% cheaper than the other.
A protein cookie is classed as a biscuit and is zero-rated, but as soon as you apply chocolate to the top of the cookie, it becomes a “luxury” item and moves into the standard VAT rating of 20%. According to HMRC, including chocolate chips within the cookie is fine and it maintains its “essential” status, so no VAT.
These inconsistencies are entirely UK based as far as I can tell. Within the EU we see a different landscape for protein snacks. Germany for example does not differentiate between protein cookies and protein bars. They all have the same sales tax of 7%.
Of course, having a zero-rated protein snack makes those lucky enough to be rated as such, very attractive to brands. For example, the flapjack which according to HMRC is classed as a cake and as such is zero-rated. This luxury snack is full of sugar, fat, and calories. Now with the help of food technology, it can be high protein and low sugar and as such is a staple in any brands protein snack range. This being said, if too much fruit and nuts are added the this is no longer a flapjack. It is now a fruit and nut bar and becomes standard rated.
An equally strange VAT rule applies to gingerbread men. No VAT is charged if the figure has two chocolate spots for eyes, but any chocolate-based additions, such as buttons or a belt, mean VAT is payable.
Opalbond supplies a whole range of private label protein snacks. Just drop us a line for more information.