Is There VAT on Chocolate?

Chocolate might be a sweet treat, but when it comes to VAT, the rules aren’t so straightforward. In the UK, VAT on food is complex, and chocolate often falls under the standard-rated category, meaning 20% VAT applies. However, some food items, including certain types of chocolate, may be zero-rated, depending on how they’re made and sold.

This guide explains how VAT applies to chocolate, the difference between zero-rated and standard-rated food, and why certain confectionery is taxed differently.

Understanding VAT

Value Added Tax (VAT) is a tax on most goods and services in the UK. The standard VAT rate is 20%, although some goods are zero-rated or reduced-rated.

VAT applies at the point of sale and is included in the price of most consumer goods unless specifically exempt or zero-rated under VAT law.

What Is the VAT Rate on Food Items?

In the UK, most food sold for human consumption is zero-rated, meaning 0% VAT applies, and no VAT is added at the point of sale. This includes staple items such as bread, milk, fruit, vegetables, and pasta.

However, some food is classed as luxury or non-essential, and these items are standard-rated at 20%. The biggest category here is confectionery, which includes most chocolate products.

Is There VAT on Chocolate?

Yes. Most chocolate is classed as confectionery, which is subject to VAT at 20%. This includes:

• Chocolate bars

• Chocolate-covered biscuits

• Chocolate truffles, sweets and boxed chocolates

• Individually wrapped chocolate items

• Chocolate sold in vending machines

VAT applies whether the chocolate is eaten hot or cold, and whether it’s sold at a shop, café or supermarket.

When Does a Zero Rate Apply to Food?

VAT law provides a zero rating for food that meets specific criteria. Foods that are not considered confectionery, alcohol, or catering, and are not designed to be consumed immediately, are usually zero-rated.

Examples include:                            

• Bread and rolls

• Fresh fruit and vegetables

• Pasta, rice and flour

• Tea and coffee

• Breakfast cereals

• Cakes and plain biscuits

The zero rate is designed to keep everyday grocery items affordable while taxing luxury or indulgent products.

What Food Has a Standard VAT Rate?

Food items that are standard-rated include:

• Confectionery (including most chocolate)

• Ice cream and frozen desserts

• Soft drinks

• Crisps and savoury snacks

• Catering or takeaway food served hot

• Biscuits partly or fully covered in chocolate

If a food product is considered to be prepared, sweetened or consumed for indulgence, it will usually be taxed.

What About VAT on Confectionery?

Confectionery is broadly defined as sweetened prepared food not normally eaten with a knife and fork, which includes:

• Chocolate

• Sweets

• Fudge

• Liquorice

• Chewing gum

• Chocolate-coated items

These items are taxed at 20% VAT, regardless of where they’re sold.

An interesting VAT distinction is that cakes are zero-rated, but chocolate-covered biscuits are not. For example:

• A Jaffa Cake is zero-rated (as ruled by a famous tribunal case)

• A chocolate digestive is standard-rated, as it’s a biscuit coated in chocolate

Final Thoughts

In the UK, chocolate is generally subject to 20% VAT, because it is classified as confectionery. There are some exceptions based on how a product is made, what ingredients it contains, and how it's consumed – but in most cases, if you're buying a chocolate bar or a sweet treat, VAT is included in the price.

If you’re a business selling or producing food, it’s important to understand the VAT classification of your products. And if you’re a consumer, now you know why your favourite chocolate costs a little more than your everyday loaf of bread.