Is There VAT on Food and Drinks? UK VAT Explained

If you run a café, restaurant, or takeaway in the UK, you’ve probably asked Is there VAT on food? The answer isn’t always simple, as it depends on how and where the food is sold. Some items are zero-rated, others are standard-rated, and a few come under reduced rates. 

These rules can change based on temperature, packaging, or whether the food is eaten in or taken away. Knowing the correct VAT on food helps café, restaurant, and takeaway owners price items accurately and follow HMRC VAT regulations.

VAT on Food and Drinks

When it comes to VAT on food, the rules can vary depending on how the food is sold and consumed. Here's a simple breakdown:

• Zero-rated: 

Most cold food sold in shops or supermarkets, such as bread, milk, fruits, or vegetables, is zero-rated for VAT.

• Standard-rated (20%): 

Hot food, restaurant meals, and takeaway drinks are usually subject to the standard VAT rate.

• Reduced-rated (5%): 

Certain supplies, such as children’s car seats or home energy, may qualify for reduced rates, though very few food items fall here.

When you have the question, is there VAT on food?, the general rule is: cold food to take home is usually zero-rated, while hot food or food eaten on the premises has VAT added.

VAT in Cafés and Restaurants

For cafés and restaurants, VAT on food applies to almost everything sold for consumption on-site. HMRC treats all eat-in food and drinks as standard-rated, whether the item is hot or cold.

Examples include:

• Sandwiches, cakes, or drinks are consumed inside the café.
• Hot food is served to customers eating at tables.
• Coffee, tea, or soft drinks are served for dine-in customers.

If you sell food in your café or restaurant, you must charge 20% VAT. So when asking is there VAT on food served in cafés and restaurants, the answer is always yes.

VAT on Takeaway Food and Drinks

Many takeaway businesses ask, do you pay VAT on food sold to take away? The answer depends on whether the food is hot or cold, and how it is packaged for sale.

• Hot takeaway food and drinks: Always standard-rated (20% VAT). For example, hot sandwiches, coffee, or pizza.
• Cold takeaway food: Usually zero-rated, unless it’s meant to be eaten hot or provided with utensils for immediate consumption.
• Cold drinks: Most soft drinks are standard-rated, even if sold cold.

Simply put, VAT on takeaway food applies when the food is hot or freshly prepared for immediate eating.

Food with VAT vs Zero-Rated Food

To understand food with VAT, it helps to know which items fall under each category:

VAT Category	Examples of Food Items
Zero-rated (0%)	Bread, cereals, eggs, fruits, vegetables, cold takeaway sandwiches and salads, uncooked meat and fish bought from shops
Standard-rated (20%)	Hot takeaway meals (pies, burgers, chips), soft drinks, bottled water, alcoholic drinks, food and drinks eaten on café or restaurant premises

Why VAT on Food Matters for Businesses

Correct handling of VAT on food is essential for cafés, restaurants, and takeaways to manage pricing, bookkeeping, and HMRC returns.

• Charging VAT incorrectly can lead to underpayment or overpayment of tax.
• VAT-registered businesses must include the correct VAT rate on invoices and sales receipts.
• VAT registration is required if annual sales exceed £90,000 (VAT threshold).
• Keep proper records to file timely and accurate VAT returns.
• Food VAT rules can change; check HMRC guidelines regularly.

If you run a small business and are unsure about VAT on food, professional accounting support can help make VAT filing easier and more accurate.

Conclusion

The VAT rate depends on several factors, like whether the food is hot or cold, if it is eaten on-site or taken away, and how it is packaged. Most cold food to take home is zero-rated, while hot food and dining in always attract the standard 20% VAT.

Getting VAT right is crucial to avoid penalties and keep your business financially healthy. Make sure to register for VAT if your sales exceed the threshold, keep clear records, and stay updated with HMRC rules, as these can change.

Get expert help

If managing VAT feels complicated, our team of expert accountants is here to support you every step of the way. We handle VAT returns, payroll, and bookkeeping with care and precision, allowing you to focus on running and growing your food business without the stress of tax worries. 

For personalised assistance and reliable accounting services, call us today at 0208 8611685 or email info@phs-uk.co.uk. Let us take care of your numbers while you concentrate on serving your customers and expanding your business.

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