Many businesses find VAT on takeaway food confusing. The rules are more complex than many business owners expect. The same food may be zero-rated in one scenario and subject to 20% VAT in another. Moreover, it depends on whether it is consumed on the premises, kept hot, reheated, packaged for hot consumption, or provided as part of a catering service.
For example, a cold sandwich supplied as part of a catering service (such as eating in at a café or restaurant) is generally subject to 20% VAT, whereas the same cold sandwich sold purely as takeaway is normally zero-rated. While a pasty is cooling naturally, it may be zero-rated. However, if it is either kept heated or sold as hot food, it may be subject to 20% VAT.
For takeaway owners, restaurants, cafés, and bakeries, the appropriate VAT treatment depends on more than the product itself. You must consider where the food is consumed, the food’s temperature upon delivery, the heating method, and the packaging.
This guide provides a clear explanation of VAT on takeaway food and the current rules that apply, including hot meals, chilled food, drinks, deliveries, meal deals, and sales by major fast-food businesses.
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What is VAT in the UK?
Before delving into how VAT on takeaway food works, you first need to know what VAT is. VAT (Value Added Tax) is a tax that is added to most goods and services that are sold by VAT-registered businesses.
When to Register for VAT?
You must register for VAT if your taxable turnover for the previous 12 months exceeds the VAT threshold of £90,000 or is expected to exceed it within the next 30 days alone. Also, you should know that a business can charge VAT only if it is registered for VAT with HMRC (unless the voluntary registration rules apply).
Is there VAT on Takeaway Food?
To further discuss VAT on takeaways, keep in mind that whether you pay VAT on takeaway food depends on whether it is hot or cold. There are two main situations:
Hot Takeaway Food
It is subject to the standard VAT rate of 20%. Food is generally standard-rated where it has been heated for the purposes of enabling it to be consumed hot or is kept hot after cooking. HMRC also considers factors such as heat-retaining packaging and whether the food is marketed as hot food.
Cold Takeaway Food
Most cold food served cold, such as cold sandwiches, wraps, and salads, is subject to zero-rated VAT.
Is There VAT on Food?
In the UK, VAT on most basic grocery items is zero-rated. However, if it is supplied as hot food, consumed as part of catering, or falls within HMRC’s standard-rated food categories.
Under HM Revenue and Customs (HMRC) regulations, 0% VAT applies to everyday groceries, milk, raw meat/fish, fresh produce, bread, and cold takeaway food consumed at home.
On the other hand, most sugary or alcoholic drinks, meals consumed on-premises (such as at cafes or restaurants), and hot takeaway or dine-in food are subject to a 20% VAT.
Can You Charge VAT On Takeaway Food?
Yes, it is necessary to charge VAT on takeaway food if your business is VAT-registered and the items satisfy the catering criteria prescribed by HMRC. Whether VAT applies depends on HMRC’s VAT regulations and on whether your business is VAT-registered. The temperature and nature of food are the determining factors in determining the specific tax rate.
If the item is served hot, is a hot drink, or is a standard-rated snack, you are legally obligated to charge the standard 20% VAT on takeaway orders. Cold savouries, such as cold sandwiches, salads, sushi or wraps, and ambient bakery products, such as cold sausage rolls, pasties, pies or croissants, are not subject to standard VAT (20%).
What is the Difference Between Eat-In and Takeaway?
One of the most important questions to consider is where the customer eats food, before looking at the food itself.
Eating In
Each item sold for consumption within a cafe, restaurant, or designated seating area is classified as catering. This is why, if a customer consumes food or drink on premises, you must charge VAT at the standard rate of 20%. Regardless of whether the item is hot or cold.
Takeaway
On the other hand, VAT treatment depends on the nature of the item and whether it is supplied hot for immediate consumption if the customer takes food off the premises.
What are the VAT Rules for Takeaways?
To learn VAT on takeaway food, you need to understand the VAT rules on takeaways.
VAT on Hot Takeaway Food
Usually, 20% VAT is charged on hot takeaway food. In general, food is considered hot if it has been heated for consumption, kept hot after preparation, or sold in heat-retaining packaging. Furthermore, freshly baked products that are currently cooling are zero-rated if they are not marketed as hot food or kept hot.
VAT on Cold Takeaway Food
In general, VAT on cold takeaway food is zero-rated (0%). However, basic sustenance and most cold takeaway food are zero-rated under HMRC tax regulations, as they are classified as food supplies rather than catering.
Certain cold items, such as ice cream and similar frozen products, are always standard-rated at 20% under UK VAT law, even though they are served cold. Most cold takeaway food is zero-rated, unless it falls within one of HMRC’s standard-rated exceptions such as confectionery, soft drinks, crisps or ice cream.
What is The VAT Rate On A Takeaway Meal?
In the UK, the VAT rate for a takeaway meal depends on whether the food is served hot or cold. Look at the table below; it highlights the types of takeaway food.
| Type of Takeaway Food | VAT Rate |
| Cold takeaway food (cold sandwich, salads) | 0% |
| Hot takeaway food | 20% |
| Most cold sandwiches and salads | 0% |
| Hot drinks | 20% |
| Cold drinks (except certain milk-based drinks and certain fruit juices) | 20% |
| Cold bakery items (except items categorised as confectionery by HMRC) | 0% |
| Grocery staples( milk, fresh fruit, or raw meat) | 0% |
| Food heated up to order (microwaved burrito) | 20% |
| Catering services (including food prep and delivery) | 20% |
What Foods are Exempt from VAT?
When understanding VAT on takeaway food, remember that in the UK most food items are not VAT-exempt; instead, they are zero-rated. In the United Kingdom, most essential foods for human consumption are zero-rated (0% VAT), meaning they are not subject to VAT. However, under UK tax law, they are zero-rated rather than strictly VAT-exempt. Businesses that sell zero-rated food can reclaim VAT on eligible business expenses, while exempt businesses are generally unable to do so.
Does McDonald’s Charge VAT?
Yes, McDonald’s charges VAT. McDonald’s charges 20% VAT on most of its hot food and beverages. This applies to every item on its menu, as it specialises in hot, freshly prepared fast food. Some cold takeaway items sold without catering services may qualify for zero-rating under HMRC rules. On the other hand, in the UK, prices displayed to consumers must include VAT where it is chargeable. VAT is already included in the price of your meal.
Is VAT Charged on Food Delivery?
To fully understand VAT on takeaway food, it is important to know whether VAT is charged on food delivery. If the food is standard-rated (20% VAT) and the vendor is VAT-registered, food delivery is subject to VAT.
- All hot takeaways and hot home deliveries, for example, hot pizzas, curries, and burgers, are standard-rated. The cost of the food and the delivery charge are both subject to VAT.
- Cold takeaway dishes are eligible for a 0% VAT rate. However, VAT must be charged at 20% if the order includes standard-rated exceptions, such as crisps, confectionery, chocolate, ice cream, soft drinks, or alcoholic beverages. For mixed orders containing both zero-rated and standard-rated items, the delivery charge must be split proportionally between the two VAT rates.
What is VAT on Catering?
VAT on catering is distinct from VAT on takeaway food, as these services are typically subject to the standard 20% VAT rate. The standard 20% VAT rate is applied to most catering services. Furthermore, under HMRC rules, standard-rated food and beverages include those provided for restaurant meals, events, and the majority of hot food in catering services.
Regardless of whether the food is served hot or cold, it is not eligible for zero-rated VAT because it is legally classified as a service rather than a supply of essential groceries.
The Bottom Line
Getting VAT on takeaway food right depends more than on determining whether an item is hot or cold. VAT treatment can change based on the location of consumption, the purpose of heating, and the packaging. More importantly, VAT treatment can change depending on whether the food is part of a combined meal. As a result, takeaway businesses carefully review each menu item, maintain accurate sales records, and update their VAT classifications whenever products, packaging, or serving methods change.
Whether you’re just forming your company or already knee-deep in paperwork, our London-based accountants are ready to jump in. One quick call and we’ll figure out what you actually need.
Want Expert Support For VAT on Takeaway Food?
If you are still figuring out whether VAT applies to takeaway food, don’t worry; we are here to help you. At LimitedCompanyAccountants, our accountants can review your menu, classify hot and cold products, evaluate eat-in and transport sales, and ensure that takeaway income is accurately recorded. We also help with VAT registration and return preparation.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.
