Those buns aren't looking so hot

It's true. Morrisons buns may not look so hot for a reason. Money. The Leeds-based grocer has asked the Government to rename its buns 'Cold Cross Buns' in order to avoid charging customers VAT.

All food sold 'above ambient temperature' is now subject to a 20% VAT charge, hiking the cost of a range of hot food. Could your Easter bun dodge the tax?


"This time next year the freshly made buns will have to be completely cooled down before customers are able to buy them, "says Guy Mason, head of corporate affairs at Morrisons.

"The Government will not be applying VAT to bread and hot cross buns will escape the tax rise if they are defined as a bread product. We really hope the Government sees sense and does not force us to charge VAT on our hot cross buns."

The law currently is uneven. Some hot takeaway foods like a big of fish and chips are liable to VAT. But pies, pasties and other baked products aren't. For a £2.80 posh pie, for example, a 20% hike pushes the cost to close to £3.50. A substantial rise. Just look at the impact on the share price of Greggs.


A month ago Greggs plc shares sold were nudging 560p. Now they're trading at around 512p. Around a 9% drop. It's doubtful the impact of a hot food tax will impact Morrisons share price much, despite its reputation for churning out pies, buns and other Northern trad fare. (Morrisons remains the only supermarket with its own "The Pie Shop".)

Meanwhile Morrisons flogged, it reckons, around six million hot buns in Easter week. Numbers that might cool by this time next year. Unless George Osborne and HMRC relent. Otherwise, warm up those buns.

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