Budget: VAT rise will add £33 to average shopping basket

Canny shoppers are being urged to adopt some clever tricks to help them deflect the 2.5% rise in VAT to 20% next January. The rise will add at least £33 a year to the average shopper's supermarket basket, it was predicted today, as consumer groups warned that the rise will have a disproportionate effect hitting poorest families the hardest. Although a lot of staple food is exempt from VAT, it is payable on grocery items such as snacks, drinks and confectionery. But shoppers can avoid VAT altogether through some clever substitutions, according to grocery shopping comparison website mySupermarket.co.uk , such as swapping shelled salted nuts, which are liable for VAT, to unshelled salted nuts like monkey nuts and pistachios, which aren't. Among other curious discrepancies, cream cakes attract no VAT while frozen Artic rolls do. And if it all gets too much you can munch yourself into a stupor by devouring zero-rated rum babas. Non-food items such as toothpaste and cleaning products are also subject to the VAT rise. Based on the average basket of goods, the rise of 2.5% could cost consumers up to £33 a year more from 4 January, and £66 more than when VAT was temporarily reduced to 15% last year, mySupermarket.co.uk said. The full list of zero and standard-rated food and drink products is shown on the HM Revenue & Customs website . Jonny Steel, spokesman for mySupermarket.co.uk, said: "Consumers should be aware that the VAT rise from January will affect the cost of their basic weekly groceries, as not all products are exempt. There are some strange discrepancies between the types of foods that qualify for VAT, making it hard to predict where the increase will hit shoppers most. "By making some smart decisions consumers can avoid paying VAT on a lot of convenience foods. For instance, a gingerbread man decorated with two chocolate eyes is exempt from VAT, but if it contains any more chocolate standard-rated VAT is charged." Other foods that come under the zero-rated VAT banner, despite being "convenience foods", include Jaffa cakes, milkshakes, chocolate spread and tortilla or corn chips. Mike O'Connor, chief executive of Consumer Focus, said the budget would be setting off alarm bells: "Thousands of the things we buy everyday are going to get more expensive. The VAT rise will hit the poorest consumers hardest, as people who earn least already spend proportionately more of their income on VAT. "All too often the poor pay more because many don't have access to cheaper online or direct debit deals, and often have to resort to higher cost borrowing." Zero-rated VAT products Chocolate-chip biscuits Jaffa cakes Cream gateaux Mousse Chocolate spread Toffee apples Milkshakes Tortilla, corn chips or Twiglets Roasted or salted nuts supplied in shells eg monkey nuts, pistachios Standard-rated VAT products Wholly or partly chocolate-coated biscuits Gingerbread man decorated with more than two choclate eyes Arctic rolls Sorbet Chocolate bars Nuts or fruit covered in chocolate or yogurt Flavourings for milk shake Potato crisps Roasted or salted nuts without shells