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When does pasty VAT apply?

29 May 2012 Last updated at 11:44 BST

Greggs, the UK's largest bakery chain, enjoyed a 6% share price boost on Tuesday after the government revised its "pasty tax" proposal.

The government had intended to levy 20% VAT on hot, freshly-baked takeaway foods to the consternation of bakers and food outlets across the UK.

Greggs, known for its pasties and sausage-rolls, had warned that the tax rise would "materially affect" its sales and profits.

The chief executive of Greggs, Ken McMeiken, told the BBC that the new proposal is "much clearer for everyone in the industry"