Every time you buy takeaway food in the UK, you could enter a legal battlefield of taxes. So, Value Added Tax (VAT) rules can be confusing, turning everyday takeaway into a complex puzzle of tax laws. At the same time, it is important to understand VAT on takeaway food for everyone, including cafes, restaurant owners, food delivery businesses, and customers.
HMRC applies different VAT rates. Some items are standard-rated (20% VAT) while others are zero-rated (0% VAT). The key factor is often whether the food is sold cold or hot and whether it is intended to be consumed hot.
This guide explains the UK VAT rules for takeaway food, provides practical examples, and discusses common mistakes businesses should avoid.
These rules are set out in HMRC’s guidance on catering and food VAT.
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Is There VAT on Food?
VAT on most basic grocery food is zero-rated for VAT in the UK. However, there is standard-rated (20%) VAT on takeaway food if it is hot, dining in, and luxury items like sports drinks, crisps, ice cream, and confectionery. According to HM Revenue and Customs (HMRC) guidelines, 0% VAT applies to basic groceries, milk, raw meat/fish, fresh produce, bread, and cold takeaway food to eat at home. However, 20% VAT applies to hot food for immediate consumption, regardless of whether it's takeaway or dine-in. Standard-rated VAT also applies to food eaten on the premises (e.g., cafes and restaurants), and most alcoholic or sugary drinks.What is Eat-In Vs Takeaway?
The most important question to consider before looking at the food itself is where the customer eats it. VAT on takeaway food depends on:Eating In
Every single item sold for consumption inside a cafe, restaurant, or designated seating area is classified as catering. It is automatically hit with the standard 20% VAT rate, whether it is a cold salad or hot steak.Takeaway
If a customer takes away food off the premises, the VAT treatment depends on whether it is supplied hot for immediate consumption and on the nature of the item. Visit the official HMRC website for more details on VAT on takeaway food.Can You Charge VAT on Takeaway Food?
Yes, you can charge VAT on takeaway food if your business is VAT-registered and if the food meets specific HMRC criteria. Whether VAT must be charged depends on HMRC's VAT rules and whether your business is VAT-registered. The tax rate is determined by the item type and the food’s temperature. You are legally required to charge the standard 20% VAT to takeaway orders if the item is served hot, it is a hot drink, or is a standard-rated snack. You cannot charge standard VAT (20%) on cold savoury items like cold sandwiches, salads, sushi, or wraps and ambient bakery goods like cold sausage rolls, pasties, pies, or croissants.Is there VAT on Hot Takeaway Food?
Yes, there is VAT on hot takeaway food, which is usually charged at 20%. Generally, food is considered hot if it has been heated for the purpose of being eaten hot, kept hot after cooking, or sold in heat-retaining packaging. Also, freshly baked products that are simply cooling down after baking are generally zero-rated if they are not kept hot or marketed as hot food. For example, standard-rated hot takeaway food includes hot pizza, hot burgers, pastries kept in a heated cabinet, and roast chicken sold hot. If a restaurant sells takeaway hot pizza for £10, the VAT on takeaway food is charged at £2, making the total price £12.Is There VAT on Cold Takeaway Food?
Generally, there is zero-rated (0%) VAT on cold takeaway food. Under HMRC tax regulations, basic sustenance and most cold takeaway food is zero-rated because it is treated as a supply of food rather than catering. However, under UK VAT law, some cold items like ice-cream and similar frozen products are always standard-rated at 20% even though they are served cold. Most of the time, cold takeaway food is zero-rated for VAT. For instance, zero-rated cold takeaway food includes cold sandwiches, salads, cold pasta dishes, fruit, and bakery products sold cold. This means when a restaurant sells a cold sandwich for £5, it usually has no VAT, so the customer pays £5.What is the VAT Rate on a Takeaway Meal?
The VAT on takeaway food depends on the type of food being sold. The table below highlights the types of takeaway food and the VAT rate:| Type of takeaway food | VAT rate |
| Most cold takeaway food | Zero-rated (0%) |
| Most cold sandwiches and salads | Zero-rated (0%) |
| Hot takeaway food | Standard-rated (20%) |
| Hot drinks | Standard-rated (20%) |
| Most cold drinks (except certain milk-based drinks) | Standard-rated (20%) |
| Cold bakery items | Zero-rated (0%) |
| Grocery staples like milk, fresh fruit, or raw meat | Zero-rated (0%) |
| Food heated up to order like a microwaved burrito | Standard-rated (20%) |
What Foods are Exempt From VAT?
To fully understand VAT on takeaway food, it is important to know that in the UK, most everyday food in the UK is not VAT-exempt. Instead, it is zero-rated for VAT. This distinction is important because businesses selling zero-rated food can usually reclaim VAT on eligible business expenses, whereas exempt businesses generally cannot. Remember, exemption is more commonly used for services such as healthcare, education, insurance, and certain financial services rather than ordinary food sales.What is VAT Registration Threshold?
Understanding the VAT registration threshold is essential when discussing VAT on takeaway food. Normally, a takeaway business must register for VAT if its taxable turnover exceeds the current VAT registration threshold of £90,000 in a rolling 12-month period. Furthermore, a business can charge VAT only if it is VAT-registered. Although zero-rated sales do not charge VAT, they still count towards the registration threshold.Do McDonald's Charge VAT?
Yes, most hot food and hot drinks sold by McDonald's are subject to 20% VAT. However, certain cold takeaway items may qualify for zero-rating under HMRC rules. This VAT applies to almost everything on their menu because it specialises in hot, prepared fast food. However, some cold takeaway items at McDonald's may be zero-rated under HMRC rules. Since UK consumer prices must legally include tax on the menu, you do not see the VAT added as an extra fee at checkout. It is already built into the price of your meal.What is VAT on Catering?
VAT on catering generally differs from VAT on takeaway food because these services are usually subject to the standard 20% VAT rate. Most catering services are taxed at the standard 20% VAT rate. Under HMRC rules, food and drinks supplied for restaurant meals, events, and most hot food provided as part of a catering service. Since it is legally classified as a service rather than just a supply of essential groceries, it cannot qualify for zero-rate VAT, regardless of whether the food itself is served hot or cold.What is VAT on Sandwiches UK?
Many of you might be wondering if there is VAT on sandwiches. Well, the answer is simple: there is zero-rated VAT on cold sandwiches and the standard 20% VAT on toasted or hot sandwiches. For example, pre-packaged sandwiches and fresh cold baguettes are zero-rated. Whereas hot, toasted paninis and sandwiches are standard-rated.Let’s Discuss Your Needs
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