Budget Hits Pensioners And ‘Cornish Pasty’

IN HIS ANNUAL budget statement last month, George Osborne said he was cutting the top rate from 50 percent to 45 percent by April next year on incomes over £150,000 a year. He argued that the original higher rate did not yield as much as expected, partly because the rich were able to avoid the tax.

Osborne sought to deflect criticism that the coalition government was being soft on the wealthy by announcing a big hike in the level at which Britons start paying tax, to £9,205. There are doubts, however, whether the poorest will reap the full reward, given they may lose some benefits.

One group that appears disappointed by changes announced were retired people. Age UK, the country’s leading lobby group for pensioners, criticized Osborne’s plan to scrap the age-related tax allowance, saying it would “affect those with modest pensions and savings for their retirement.” Documents published alongside the budget indicate that the Treasury may reap a windfall of around £3.3bn from the changes to the tax allowances to pensioners.


Most food and drink is zero-rated, but takeaway food sold to be eaten hot is subject to Value Added Tax at 20 percent.

But amidst the food taxation, the plight of the humble pasty has been raised in the House of Commons after the chancellor announced plans to slap VAT on the snack.

Mid Cornwall MP Stephen Gilbert said the pasty was “a staple, hearty meal” which brought millions of pounds into his county and must be protected. His colleague Andrew George said those in Cornwall would “be fighting them on the beaches” to block any “pasty tax”.

Ministers say all food sold “above ambient temperature” should carry VAT.

VAT is not charged on most food and drink  – such are described as zero-rated. It is payable on takeaway food sold to be eaten hot, but baked goods which are put on display warm and subsequently cool down are also zero-rated.

Bread would remain zero-rated  – even if it is still warm when placed on shop shelves.

Bakery chain Greggs has said it will make “strong representations” about the plan and did not believe its “freshly baked savoury products” should be included. Its shares fell by five percent on immediately after the announcement, wiping £30m off their value.

During a debate on the Budget, Mr Gilbert, Lib Dem MP for St Austell and Newquay, said the issue was “exercising my countrymen in Cornwall”.

Addressing Business Secretary Vince Cable, he said: “The minister will no doubt be aware that the pasty is not only a staple, hearty meal but, in effect, employs thousands of people and brings millions of pounds into the Cornish economy. Will he give some clarity on whether we can avoid a pasty tax?”

Fellow Lib Dem and St Ives MP Mr George said: “On the sublimely fundamental and seriously important issue of pasty taxes in Cornwall, let me reassure the honourable gentleman that we will be fighting them on the beaches.”

BBC Budget Key Points


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