VAT for RESTaurants

Written By Anna Sowa

VAT-registered businesses must charge different VAT rates based on their goods and services. Most cafes fall into two VAT categories: a standard rate of 20% and zero-rated VAT at 0%.

A key consideration for VAT rates is if customers dine in or take food and drinks to go. If customers eat in—whether inside or outside—the VAT rate is the standard 20%, even for items like cakes and cold sandwiches, which are zero-rated for takeaways.

It's crucial to understand the difference between zero-rated goods, which must be recorded in VAT returns and invoices, and exempt goods.

Items that are always standard-rated include:

  • Catering

  • Alcoholic drinks

  • Confectionery

  • Crisps and savory snacks

  • Hot food

  • Sports drinks

  • Hot takeaways

  • Ice cream

  • Soft drinks and mineral water

Restaurants and takeaways must charge VAT on all hot takeaways and home deliveries, but do not need to charge VAT on cold takeaways unless eaten in a designated area.

Anna Sowa