Under UK law, VAT on cakes and biscuits is set at 0%. However, crucially, the law states that if a biscuit is partly or wholly covered in chocolate then it is to be taxed at the standard rate. HMRC clearly defines the difference as follows:
“The significance of the borderline between cakes and biscuits is that a cake is zero-rated even if it is covered in chocolate, whereas a biscuit is standard-rated if wholly or partly covered in chocolate or some product similar in taste and appearance.”