The Government has performed a U-turn on its plans to introduce VAT on hot take-away food - dubbed the pasty tax.
Chancellor George Osborne announced plans in his March Budget to close a VAT loophole, and had proposed that any food served above ambient temperature would be taxed at the standard rate of 20%, rather than being zero-rated.
But following a popular backlash and criticism from companies including baker Greggs, the chancellor announced yesterday that pasties and other bakery items would not attract VAT if they were "cooling down" after being removed from the oven.
Shares in Greggs have risen on the news, up 9% this morning in trading earlier, having fallen 15% since the Budget.
By Neil Gerrard
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