VAT Considerations Catering & Cafes

VAT on food and drinks depends on whether it's consumed on-site (standard rate) or taken away (usually zero-rated for cold items, standard rate for hot items). There can be exceptions…

On-premises consumption refers to food and drinks consumed within the confines of the café or restaurant. This includes eating at tables, whether inside or outside, provided by the establishment.

Any supplies of food and drink that are supplied as part of a supply of catering services (with contract) for consumption off-premises remain standard rated

Cold foods which are zero-rated if sold as a takeaway, for example:

• Cakes

• Plain biscuits (not chocolate-covered)

• Fruit and vegetables

• Bread and bread rolls

• Flapjacks or cereal bars

• Salads, 

• Pastries allowed to cool to room temperature

• Cold sandwiches and wraps 

Key Points for Cafes with VAT Compliance

• Train staff to categorize food (hot/cold, eat-in/takeaway) for accurate VAT billing.

• Clearly label items with VAT status, especially for items taxed differently depending on consumption (e.g., sandwiches).

• Program cash registers to add VAT correctly for each scanned item.

• Maintain an updated product list with VAT classification for each item.

• Mixed orders with standard and zero-rated items require extra attention.

Need Help?

VAT regulations can be complex. We offer business tax advice to ensure you comply with VAT rules and optimize your tax position.