VAT on Food

A Guide Based on VAT on Food

You may carry out business in the food line, you can be part of a restaurant, cafe, manufacturing company or you may own a restaurant. have you ever heard of  VAT on food? Yes, you heard it right! now you must be wondering how is it possible and the answer is that it is possible but not all the time. In case you are not a kind of a business that is VAT registered or you do not expect to reach the VAT turnover threshold of £85, 000, this guide might not interest you.

However, if you intend to seek guidance about VAT on food, we are happy to let you know that this guide holds some of the main points of the legislation, which includes the following:

  • Is VAT on Food Possible?
  • Zero Rated VAT – What food Items are included?
  • VAT on Takeaway Food
  • VAT on Restaurant Food
  • The Bottom Line


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Is VAT on Food Possible?

As we all know that food is sold through different channels these days and VAT is covering a lot of them. However, the VAT rules vary and it depends on the situation and the food type. The guide provided by the government of the UK covers salient features which are fair information to an understanding that how VAT might affect your food business. This includes the following:

  • Food and drinks that are intended for the use of humans are zero-rated.
  • A restaurant should charge VAT always.
  • VAT is not charged on takeaways of cold food.
  • VAT is charged when the food is eaten in the designated area or in the takeaway.
  • VAT is always charged on how food items regardless of takeaway or home deliveries.
  • Some standard-rated items include alcohol, crisps and snacks, ice cream, mineral water, soft drinks, sports drinks, hot takeaways, and confectionery.

These points given will decide if the food is zero-rated or not:

  • Does the food come under the hot food or cold food category?
  • Is the food supplied to eat or takeaway?
  • Whether the food falls under the category of zero-rated food or standard-rated food?

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Zero Rated VAT – What food Items are included?

Food that is unprocessed and comes under the human consumption category is zero-rated for VAT. This included the following:

  • Culinary Herbs
  • Fish and raw meat
  • Pulses, nuts and cereals
  • Vegetables
  • Fruits

If we look into further details, we will find the items that are used in baking and home cooking are also zero-rated. Some cases are a bit complex when you see that:

  • The chips and tortillas are xero-rated whereas crisps are standard-rated.
  • Nuts in the shells are zero-rated but nuts without the shells are standard-rated.
  • Cod is standard rated and salmon is zero-rated.

Moreover, to get this air of confusion cleared, the government of the UK has provided enough information. Moreover, the guides based on the words of professionals and accountants in this regard are also appreciable and easier to follow.


VAT on Takeaway Food:

Food businesses that offer takeaway are popular and are further fuelled in the covid time. It is making the high need of understanding the VAT on food that is delivered. Here, it is important to know that:

The standard VAT is applied if the food is:

  • Served hot
  • eaten in the designated area of the restaurant.
  • the food is standard-rated.

In case of zero-rated, the food has to be:

  • Zero-rated
  • eaten out of the premises of the restaurant
  • cold

In case you are wondering about the sushi. It is important to understand that sushi has raw ingredients used in it. If it is delivered at home or eaten away from the designated area, it is zero-rated. However, sushi served in the restaurant comes under the category of standard-rated.


VAT on Restaurant Food:

The course of catering is a factor that makes the food items standard-rated. The question that arises here is what is a course of catering? It is when the supply of food and drinks involves the factor of services as well. This includes the following:

  • Food and beverages are prepared in cafes and restaurants.
  • Home delivery of ready to eat food.
  • Party and wedding food or drinks
  • Cooking supply to a chef


The Bottom Line:

To sum up the discussion of VAT on food, we can say that it totally depends on the variation of the situation and the food items. The information provided by the government and professionals provides fair information to develop a better understanding as well.

Feel free to contact our Chartered Accountants in London to resolve your bookkeeping and VAT issues!


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Disclaimer: This article is intended to provide general information based on VAT on food.


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