ASDA UK ends VAT on cough/cold OTCs

UK supermarket chain ASDA has announced that it has permanently removed value-added tax from nearly 200 cough and cold remedies, including more than 90 over-the-counter products and a further 100 high-strength medicines sold through its pharmacy network.

The move, which ASDA says should save its customers over L2 million ($3.6 million) in the first quarter of 2004 alone, brings the VAT treatment of cough and cold remedies sold in its stores into line with prescription drugs, which the government already charges at a zero rate of VAT.

Research by the firm has found that customers often do not know whether VAT is charged on the products they buy and cannot understand why it applies to some products but not to others. Almost half the consumers questioned thought that health care items such as cough and cold remedies carried no VAT, when in fact the full rate of 17.5% is charged. Conversely, 63% believed that caviar would be VAT-able, whereas it qualifies for the general zero rate on food.