VAT for restaurants, takeaways and food businesses
Eat-in or takeaway, hot or cold, food or drink — the four questions that decide the VAT on almost every line of your menu.
The short answer
- Anything eaten in is catering, and catering is standard-rated at 20% — hot or cold, food or drink.
- Hot takeaway food is standard-rated.
- Cold takeaway food is usually zero-rated — unless the item itself is standard-rated, such as crisps, confectionery, ice cream or soft drinks.
- Alcohol is always standard-rated, wherever and however it is sold.
Eat in versus takeaway
The single biggest split in food VAT is whether you are supplying catering. Food consumed on your premises — including seating you share with neighbouring units, such as a food-court or mall seating area — is catering, and catering is standard-rated regardless of what the food is. A cold sandwich eaten at your table carries 20% VAT; the identical sandwich taken away does not.
That is why the till matters as much as the menu. If staff ring everything through as one button, the VAT return is guesswork. Your EPOS needs an eat-in and a takeaway price or code for every relevant item, and the daily Z-reading needs to carry that split into your bookkeeping.
HMRC sets this out in Catering, takeaway food (VAT Notice 709/1) .
Hot food, and what counts as hot
Takeaway food is standard-rated if it is hot at the point it is supplied and meets any of HMRC's tests — broadly, it has been heated so it can be eaten hot, it is kept hot, it is advertised as hot, it is provided in heat-retaining packaging, or it is supplied in a heated cabinet.
The familiar edge cases follow from that. A rotisserie chicken kept under a heat lamp is standard-rated; a cooling loaf of bread sold from the bakery shelf is zero-rated because it is not being kept hot to be eaten hot. Food liability itself is covered in Food products (VAT Notice 701/14) .
Common lines, and how they're treated
Hot drinks
Standard-rated, eat in or takeaway. A takeaway coffee carries 20%.
Soft drinks, bottled water, juices
Standard-rated wherever sold — they are excluded from the zero rate for food.
Alcohol
Always standard-rated, including bottles sold to take away.
Crisps, confectionery, ice cream
Standard-rated even cold and taken away — they sit on HMRC's excepted items list.
Cold sandwiches, salads, cakes taken away
Zero-rated, provided no seating is used and they are not part of a catering supply.
Delivery apps (Deliveroo, Just Eat, Uber Eats)
The food VAT follows the hot/cold rules; the platform's commission is a separate standard-rated cost to you with its own input VAT.
Service charge
A genuinely voluntary tip is outside the scope of VAT. A compulsory service charge is part of the catering supply and standard-rated.
Catering for events
Standard-rated as catering, including where you supply staff, equipment and delivery.
Where VAT inspections usually land
Mixed-rate businesses are a standard HMRC target. The recurring findings are the same every time: the till has no eat-in/takeaway split, zero-rated sales look implausibly high for the site, cash takings are not reconciled to the Z-readings, and staff meals or wastage are never accounted for. Clean daily records are the whole defence — which is what our hospitality accounting work is built around.
Registering, and choosing a scheme
Registration is compulsory once VAT-taxable turnover over the last rolling 12 months passes the threshold, or you expect to pass it within the next 30 days alone — see our guides to the VAT registration threshold and registering for VAT.
For a mixed-rate food business, the retail schemes matter. Apportionment and point-of-sale schemes let you calculate output VAT sensibly across a menu with several rates; the Flat Rate Scheme is often a poor fit because it ignores your zero-rated sales and restricts input VAT recovery. It is worth modelling properly before you pick one.
Want your menu and till checked against the VAT rules?
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Common Questions
Is there VAT on takeaway food?
Hot takeaway food is standard-rated at 20%. Cold takeaway food is normally zero-rated, unless the item is one of the standard-rated exceptions such as crisps, confectionery, ice cream or soft drinks.
Why does eating in cost more VAT than taking away?
Food eaten on the premises is a supply of catering, and all catering is standard-rated — even if the same item would be zero-rated taken away.
Is there VAT on a takeaway coffee?
Yes. Hot drinks are standard-rated whether you drink them in or take them away.
Do I charge VAT on a service charge?
A genuinely voluntary tip is outside the scope of VAT. A compulsory or automatically added service charge forms part of the standard-rated catering supply.
How is VAT handled on Deliveroo, Just Eat and Uber Eats orders?
You still account for VAT on the food you supply under the normal hot/cold rules, based on the full order value. The platform's commission is a separate cost to your business, and you can recover the input VAT on it if you are registered.
Is the Flat Rate Scheme good for a restaurant or takeaway?
Often not. It applies one percentage to all turnover including zero-rated sales and limits input VAT recovery, which can be costly for a business with significant cold takeaway income or high purchase VAT. Model it before joining.
Last reviewed September 2026. General guidance for UK businesses, not advice on your specific circumstances — food VAT depends on the precise product and how it is supplied.