VAT on food and drink: the rules that trip businesses up

Food and drink VAT rules look simple on the surface but contain enough exceptions that hospitality businesses regularly get individual items wrong, even with good intentions.

Why it's more complex than 'food is zero-rated'

Most basic food is zero-rated for VAT, but there are significant exceptions — hot food, food eaten on the premises, and certain categories like confectionery and soft drinks are generally standard-rated.

Eat-in vs takeaway

The same item can be taxed differently depending on whether it's eaten on the premises or taken away, which means point-of-sale systems need to be configured correctly to charge the right rate at the point of sale.

Common problem areas

Hot takeaway food, mixed hampers or gift boxes with different VAT rates inside, and service charges added to a bill are all areas where businesses commonly apply the wrong treatment.

Our advice

We review menu and till configuration for hospitality clients against current VAT rules, since a small setup error at the till can compound into a significant liability over time.