VAT Considerations Catering & Cafes

Information updated as at 5 April-2024  | Cafes must register for VAT if their turnover exceeds a certain threshold.  They can also register voluntarily for benefits including reclaiming VAT on purchases.

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 attract the standard VAT rate regardless of whether it is eaten in or taken away include:

• Ice Cream

• Crisps, Poppadoms **

• Chocolates, sweets, and chocolate-covered biscuits

• Sports nutrition bars

• Bottled water, fruit juices and smoothies

• Choc covered biscuits

** Lentil and tortilla crisps are zero 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 

Takeaway food that requires further preparation by the customer, such as reheating, plating or assembling, is usually eligible for zero-rated VAT. It is essential to provide explicit reheating or preparation instructions with these products, which confirms they are not ready for immediate consumption when sold. 

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.


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