Following weeks of protests the coalition government has climbed down on two VAT measures announced in the Budget, including the ‘pasty tax’ and a new charge on static caravans.
The Chancellor wrote to Andrew Tyrie, the chairman of the Treasury Select Committee, to confirm the climb down and alter the definition of a "hot" pasty.
This will allow the VAT reversal on food that is “cooling down”, such as pasties and sausage rolls, after being removed from the oven.
Had the original measure gone ahead, it would have added 50p to a £2.50 savoury food item and raised £110m for the Treasury.
The government also announced that a 20% VAT charge due to be levied on static caravans will now drop to 5% from April next year.