All you need to know about VAT on food in restaurants

Unless you’ve studied Accounting, dealing with VAT is likely to be a confusing, difficult and rather murky topic, especially for restaurant owners who are just starting out.

But there is a relatively simple solution to VAT on restaurant food.

Keep reading to get the answers on this tricky situation!

What’s the VAT payable for food in the UK?

There are two rates of charges for food and drink in the UK.

In the first instance, food and drink for consumption by people is usually zero-rated.

On the other hand, there are some which are always standard-rated and could include catering, alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water and others. 

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Should you charge VAT for takeaway food and drink in the UK?

If you own a pop-up restaurant or a street food stall, it’s good to know that if you serve cold takeaway food and drink, this is generally zero-rated in the UK which means no VAT is payable on it.

However, this does not apply to food and drink that’s always standard-rated such as crisps, sweets, beverages and bottled water. 

What is the VAT payable on food in restaurants and pubs in the UK?

In short, the answer to this question is 20%.

This percentage is the standard rate. There is, however a reduced rate of 5% and a zero rate as well.

While most food is zero-rated, the food and drinks which are sold across restaurants, pubs and other culinary establishments must include a VAT of 20% to the customer’s bill.

This means that when you’re pricing your meals, you need to consider the VAT surcharge and add this on top of your final food cost in order to remain profitable.

VAT – it’s not that complicated!

Most restaurants and pubs across the UK offer warm, cooked meals.

But even if you were to order some cold sushi or a salad, VAT would still be payable. Therefore, you need to ensure that you price your food accurately and add on the 20% that’s required by law.

By talking through the VAT rate and your food cost per item with your accountant, you’ll settle on food prices on your menu that are reasonable and fair, and which also allow you to make a profit.

Remember to always seek out professional advice when dealing with VAT in order to avoid mistakes and complications further down the road. 

Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.